What rights does a minority shareholder have in a private company?
Disputes in private companies, family businesses and family offices can affect more than legal rights. They often raise questions of control, succession, governance, reputation and the preservation of long-term wealth, as well as the personal relationships that underpin them. Many of the family businesses and family offices we advise have international assets, interests and family members. We regularly help clients navigate cross-border disputes relating to ownership, governance, succession, investment structures and reputation across multiple jurisdictions.
Can I challenge decisions made by the majority shareholders?
In some circumstances, yes. The options available will depend on the nature of the decision, your rights as a shareholder under the company's constitutional documents and the impact on your interests.
What can I do if I am excluded from the management of my business?
If you have been excluded from management contrary to agreed arrangements or your reasonable and legitimate expectations, you may have legal remedies available.
Can I remove a shareholder from a private company?
This depends entirely on the company's constitutional documents and any shareholders' agreement. Absent provisions in the company's articles of association and/or shareholders' agreement, you cannot force out a shareholder.
How can I remove a director from a company?
There are statutory rights under s. 168 of the Companies Act 2006 to remove directors from office, and directors can also be removed in accordance with the company's constitutional documents.
What happens when directors disagree about the future of a business?
Disputes between directors can affect decision-making and business continuity. Early advice can help resolve deadlock and protect the company's interests. This is particularly an issue where there is a deadlocked board or there are allegations of a director being conflicted, and no provisions are contained in the company's constitutional documents to deal with the situation.
How do I resolve a dispute within a family business?
With care and sensitivity. The best approach depends on the circumstances, but early intervention can often help preserve both business value and family relationships.
Can family members bring legal claims against each other in relation to a family business?
Yes. Family members may have claims arising from their roles as shareholders, directors, employees, beneficiaries or business owners.
What happens if family members disagree about succession plans?
Succession disagreements can affect both the business and the family. Clear advice can help swiftly identify practical and legal solutions.
How can I protect my position in a family-owned company?
Your rights will depend on ownership structures, governance arrangements and the company's constitutional documents.
What are my options if I am being forced out of a family business?
You may have a legal right to challenge your exclusion under s. 994 of the Companies Act 2006 (i.e. via an unfair prejudice petition).
What is an unfair prejudice claim?
An unfair prejudice claim is a legal remedy available where a company's affairs have been conducted in a way that unfairly harms a shareholder's interests. It is enshrined in the Companies Act 2006 (s. 995-996 of the Act).
What can I do if another shareholder is acting unfairly?
Depending on the circumstances, you may be able to pursue legal action, seek injunctive relief or negotiate a resolution.
How do I value my shares in a disputed exit?
Valuation will depend on the facts of the case, the nature of the business and any relevant contractual arrangements. If an unfair prejudice petition is pursued, then an independent expert will be instructed to provide the Court with expert evidence on the value of the shares in issue.
What happens if a founder leaves the business on disputed terms?
Disputes can arise over ownership, valuation, restrictive covenants and future involvement in the business. Depending on the stage of the company, a founder exit can be very detrimental to the business. However, in the later stages of a company's development, once external investment has been obtained, a founder exiting is more commonplace and, subject to terms agreed on exit, can be beneficial.
Can I stop a shareholder from competing with the business after they leave?
This will depend on any contractual restrictions and the circumstances of the departure. Restrictive covenants are often contained in a shareholders' agreement (and/or employment contract if they are also an employee) and, if not, can be negotiated as part of an overall exit package.
What should I do if company funds have been misused?
Prompt legal advice is critical to investigate what has happened, preserve evidence and protect assets.
What remedies are available in a civil fraud claim?
Immediate remedies can include obtaining a search order and/or freezing injunction, with an underlying claim to seek an account of profits and/or damages for the losses suffered.
What happens if a director breaches their duties?
Directors may be required to account for losses, repay profits or face other legal consequences depending on the nature of the breach.
Can I bring a claim against a director for misconduct?
In certain circumstances, shareholders, companies and others may be able to pursue claims arising from a director's conduct.