Common Causes of Shareholder Disputes: Insights from Antunes Lawyers

Shareholder disputes often stem from a variety of triggers, reflecting the intricate dynamics of business relationships. Understanding these common causes is crucial for effective resolution.

1. Disagreements Over Direction

Decisions concerning a business’s course, employee changes, significant purchases, or disruptions can ignite shareholder clashes, particularly in closely held family corporations.

2. Breach of Shareholder Agreement

When there has been a breach, the person/s responsible may be liable for damages. Unauthorised share sales, divergent termination decisions, and unauthorised decision-making are among the most common causes of breaches of shareholder agreements. These types of situations may set the stage for conflicts that require legal navigation.

3. Fiduciary Responsibilities

The Corporations Act sets out certain fiduciary duties between shareholders, requiring transparency, loyalty, and fairness. Breaches of these responsibilities, like withholding financial information, acting in bad faith, or against the best interests of other shareholders, may often lead to a dispute.

4. Empowering Minority Shareholders

Vulnerable to being sidelined, minority shareholders often face challenges related to decision-making power and fair treatment. Addressing these disparities is vital for equitable operations.

5. Equitable Compensation and Contributions

Dissension can emerge when compensation and contributions aren’t equitably distributed. Harmonising these aspects is critical to fostering a cohesive shareholder environment.

Navigating Outcomes of Shareholder Disputes

1. Alternate dispute resolution

Our Commercial Litigation and Disputes team can assist you in preparing for and attending informal negotiation, mediation, or arbitration, which may lead to amicable solutions, minimising costs, and preserving relationships between shareholders.

2. Litigation in State and Federal Courts

Litigation can be time-consuming and very expensive. Unfortunately, shareholder disputes can escalate and litigation becomes a vital tool to uphold shareholders’ rights and pursue just resolutions. Our Commercial Litigation and Disputes team steps in with precision, armed with extensive expertise, we guide you through complexities, offering adept support through all stages of litigated proceedings.

Get in contact with Antunes Lawyers (02) 9964 0499

If you have questions regarding the common causes of shareholder disputes, contact one of our disputes and litigation team today.