50/50 Shareholder Disputes - Our Expert Panel
Partnership and shareholder disputes can arise in a variety of contexts, from disagreements over business strategy to allegations of misconduct. These disputes can have a significant impact on the stability and success of a company, and they can be complex to navigate. Law firms that specialise in partnership and shareholder disputes of limited liability companies can provide assistance to companies and individuals involved in these conflicts, helping them to understand their rights and options and to reach a resolution that is in their best interests.
A 50/50 shareholder dispute refers to a situation where two shareholders each own 50% of a company and are in disagreement over certain aspects of the business, and there is, therefore, no option for a casting vote. Resolving such disputes can be challenging, but there are several steps and options available to address the issues.
If you are looking for expert legal advice regarding company director and shareholder disputes, then our panel of solicitors can assist you. The legal professionals we work with are highly knowledgeable in ways of resolving shareholder disputes and shareholder agreements. Please get in touch today to find out more.
A 50/50 shareholder deadlock occurs when a company has two shareholders, each owning an equal 50% share in the business, and they are unable to reach an agreement on a particular issue or decision. Deadlocks can paralyse a company’s decision-making process and hinder its day-to-day operations. Common issues that may lead to deadlocks between business partners include disagreements on major business decisions, strategic direction, financial matters, or the appointment of key personnel.
Dealing with a 50/50 shareholder deadlock can be challenging, and the resolution may depend on the specific circumstances of the situation. Our panel of expert 50/50 shareholder dispute solicitors can assist you in your case. Contact us today to find out more.
How do you resolve 50/50 shareholder disputes?
It’s essential to approach the resolution process with a willingness to find a compromise and a focus on the best interests of the company. The specific steps you take will depend on the circumstances and the willingness of the parties to collaborate in finding a solution.
In a 50 50 shareholder dispute, it is challenging to come to a straightforward decision due to both parties holding equal amounts of power and control. Additionally, neither party has the power to remove the other as a shareholder, as the Companies Act 2006 requires an ‘ordinary resolution’ to do so, which needs 51% or more of shareholders to agree to the act of removing a shareholder.
There can be ways to move out of a shareholder’s deadlock, though they may take more time and effort. Some methods include:
- Open and honest communication is crucial. Schedule a meeting to discuss the issues and try to understand each other’s perspectives. Establishing clear lines of communication can help in finding common ground.
- Consider engaging in alternative dispute resolution (ADR), where an impartial third party facilitates discussions between the shareholders. Mediation can be a less adversarial and more collaborative process compared to litigation. The goal is to find a mutually acceptable solution.
- Review the company’s shareholders’ agreement, as it may contain provisions for resolving disputes. The agreement may specify mechanisms such as mediation, arbitration, or a buy-sell agreement.
- If the shareholders’ agreement includes an arbitration clause, you may opt for arbitration. An arbitrator, usually a neutral third party, will make a binding decision based on the arguments presented by both parties.
- If a buy-sell agreement is in place, consider invoking it. This agreement allows one shareholder to offer to buy the other’s shares at a specified price. The other shareholder can either accept the offer or buy out the initiating shareholder at the same price.
- Hold formal resolution meetings in accordance with the company’s articles of association or shareholders’ agreement. Follow proper procedures and allow shareholders to voice their concerns. This may involve voting on specific matters to break the deadlock.
Members Voluntary Liquidation or Sale:
If no resolution seems possible, consider options such as voluntary liquidation or the sale of the company. An equitable winding-up petition is a legal action that can be initiated by a shareholder or creditor to request the court to order the compulsory winding-up (liquidation) of a company. A winding-up petition is often seen as a serious step and is typically considered a last resort.
- Litigation is generally a last resort due to its cost and potential damage to relationships. However, if necessary, legal action through the court system may be pursued.
How can Expert Commercial Law assist?
If you are a shareholder of a limited company or any other business and are a part of a dispute with other shareholders, our panel of solicitors can assist you.
All of the shareholder and partnership dispute solicitors on our panel have the experience and expertise required to take on your case. Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).
Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.
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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.