Directors’ duties and obligations, and shareholders rights, are very different. Quite often in companies the duties of directors and shareholders become blurred and are ignored until it is too late. At this point, to avoid any Shareholder Disputes (often resulting in shareholder deadlock) early advice is essential.
Good planning and proper arrangements are extremely important if business owners are to have a good productive working relationship. Such measures can not only prevent a dispute from arising but, if a dispute is unavoidable, can mitigate the consequences of that dispute and enable a smooth continuation of trading.
At Francis Wilks & Jones we have the expertise to assist with all arrangements between business owners/shareholders and also advise, negotiate and (if required) assist with litigated disputes.
Shareholders’ Agreements Read more
We cannot overstate the importance of a properly drafted Shareholders’ Agreement in ensuring shareholder rights and obligations are reflected within a business. Whether you are a minority shareholder or not, the structure provided by a Shareholders’ Agreement reduces uncertainty and can avoid company disputes.
A Shareholders’ Agreement can deal with the arrangements to return earnings to business owners, the manner in which a company is run (subject to directors’ control), the nature of the business of the company and the agreement as to the direction in which the company’s business develops and exit arrangements for any shareholders wanting to leave at any given stage (without damaging the company’s business for the other shareholders) including removing a shareholder.
At Francis Wilks & Jones we can advise on and draft a Shareholders Agreement to satisfy all of the requirements that you and your co-shareholders have.
Director Advice Read more
Many directors are also shareholders. Directors do not own the company but they manage its affairs on a day-to-day basis, subject to shareholders’ general powers to control directors’ actions. Directors’ responsibilities are mainly owed to shareholders (although not entirely) and these duties are set-out in the Companies Act 2006.
If a shareholder has a concern that a director has a conflict of interests or has breached any of his/her statutory duties (or the company’s Articles and any Shareholders Agreement), meetings of shareholders can be held to discuss such disputes with directors and shareholder rights, and ultimately a resolution can be proposed to remove a director (if necessary) and even take action against them personally.
We refer to our page which deals with Shareholder Disputes and out comments below.
Additionally, should you be subject to any company disputes (be that director disputes, shareholders disputes or claims by Liquidators or government bodies) please see our webpage entitled “Claims Against Directors” which deals with these and other risks faced by directors.
At Francis Wilks & Jones we have the expertise to assist on all company disputes, including steps that should be taken to avoid any disagreements between shareholders.
Shareholder / Director Disputes - Rights & Remedies Read more
It is a common misconception that a minority shareholder does not have any shareholder rights within a company and that where a shareholder dispute arises they are relatively powerless. This is not the case.
In the event of any misconduct either by a company’s directors or by majority shareholder(s), often leading to a dispute between shareholders or within the company generally, a minority shareholder has the power to issue proceedings against any or all of the other shareholders in their personal capacity for causing unfair prejudice to the minority shareholder’s interest. The minority shareholder can also issue a claim against the company in contract for breaches of their shareholder rights that exist in the company’s Articles or via the Shareholder Agreement.
Alternatively, shareholders can bring derivative claims in the company name against any party (including present or former directors). See our booklet “Minority Shareholder 8 FAQs” for a summary of the remedies available.
At Francis Wilks & Jones we have experience of assisting minority and majority shareholders in these situations and please see our webpage “Shareholder Disputes” which provides more information on this.
We instructed Francis Wilks & Jones upon receiving a notice of prosecution proceedings issued against us as directors of our company, in respect of the late filing of annual financial accounts. This was particularly worrying as we provide services to a number of banks and financial organisations in the financial services industry and the prosecution could jeopardise the continued survival of our company.
However, Mr Downie provided an experienced and proactive input and advised and assisted us in bringing matters up to date and negotiated with the Companies House prosecution solicitors that the prosecution proceedings would be withdrawn in their entirety (and our company safeguarded as a result). We are very grateful for these legal services, especially as there are very few solicitors who deal with this area. Our company continues to trade, partly as a result of the legal services provided, and we have no hesitation in recommending the services of Francis Wilks & Jones in this respect.