Shareholder Disputes

Disagreements between shareholders are immensely disruptive to your business and can also be expensive and damaging. If a dispute cannot be resolved internally, it is important to take early advice on the rights and remedies that may be available to you. Kuits’ commercial litigation team are here to do help you do just that, creating strategic road maps to resolve your dispute in a way that protects both your corporate and personal interests.

We can help you with:

Unfair prejudice petitions

Shareholders may bring an unfair prejudice petition pursuant to section 994 of the Companies Act 2006 on grounds where the company’s affairs are being or have been conducted in a way that is unfairly prejudicial to the interests of the members. Examples of this include:

• Deliberate devaluing the value of the minority’ shareholding
• Failure to pay dividends for no good reason
• Misuse or misappropriation of company assets
• Payment of excessive remuneration.

We have extensive experience in both minimising risk and bringing and defending claims for unfair prejudice.

Derivative claim

A derivative claim is a claim typically brought or continued by a shareholder on the company’s behalf in relation to a breach of duty by a director. Some examples may include:

• An executive or board member breaching of their fiduciary duty
• Individuals acting in their own best interests instead of the company’s best interests.
• Potentially fraudulent activity by company board members
• Conflicts of interest
• Allegations of misleading or false financial statements

Winding up petitions

In certain circumstances, shareholders (and others) may have the right to petition for the winding up of the company on the grounds that it would be just and equitable to do so, pursuant to section 122 (1) (g) Insolvency Act 1986.

A petition for winding up may be made by the shareholders, directors of the company or any creditors of the company and will have to show that they have suffered unfair prejudice. For example:

• If there has been a breakdown in mutual trust and confidence
• Mismanagement of the company
• The original purpose for the company has been fully achieved or can no longer be pursued
• Where there was deadlock within the company and no decisions could be made