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Disputes Nightmares: What would you do if...a Founder Director goes rogue?

Posted on 8 July 2024

There is something unique about a Founder Director and the influence they have on the identity, credibility and culture of a company. Think Steve Jobs or Elon Musk. However, as companies grow, and boards and shareholders change, tensions can rise due to different personalities, different opinions and the hard lesson that the company is no longer solely under the Founder's control.

When every board meeting becomes a battleground, and the realisation dawns that the Founder, or their skills set, is no longer in sync with the future direction the business, the board can introduce a 'realignment process'. This can be met with significant resistance by the Founder Director, leading to the decision that the Founder Director has served their time and now needs to be exited from the Company. But what if, before that, the Founder Director resigns and make a claim for constructive dismissal, whistleblowing or other similar actions.

In our latest Disputes Nightmare Scenario Flash Webinar, Nicola McConville, Corporate Partner; Kim Wedral-Rooke, Partner and Head of Start-up and Scale-up Employment practice; and Peter Ogden, Managing Director, Powerscourt provide practical guideance on what to do if your Founder Director resigns and makes a claim for constructive dismissal, whistleblowing or other similar actions. They discuss:

  • The first three things you should do (apart from speak to a lawyer!)
  • Restrictive covenants - can they really protect the company?
  • Leaver provisions – dealing with a disgruntled founder shareholder
  • What recourse does the Founder have, and what might they do next?
  • Who can say what and when?
  • Tips for controlling the message and mitigating the disruption

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