Company and Partnership Disputes

Disputes internally within a business can be challenging and even have the potential to destroy a good business if not properly dealt with.

There are several ways that such disputes might manifest themselves, whether that be a dispute between:

Shareholder deadlock (particularly if accompanied by director deadlock) can paralyse a business.

How shareholder disputes and deadlocks are dealt with can often be resolved and negotiated by careful review and consideration of the Company’s Articles of Association or a written Shareholder’s Agreement, provided that (i) the Articles have properly been considered and drafted at the start of the relationship and (ii) a Shareholder’s Agreement exists.

We often find that the contentious scenarios arise where the Articles are silent as to certain rights or where there is no Shareholder’s Agreement. In these situations the Companies Act 2006 is vital in determining your rights and unravelling the deadlock where possible.

At Palmers Solicitors we can walk you through the terms that apply to your shareholder relationship with a view to resolving matters amicably if possible and to get you back to running your business. Sometimes, however, contentious steps are the only option, and, in those situations, we have experience in dealing with all common scenarios, including:

1. Unfair Prejudice Petitions
2. Petitions for the statutory winding up of a Company
3. Removal of a director(s)/the board
4. Shareholders buy-outs
5. Company buy-backs
6. Derivative Actions

Director deadlock (particularly if accompanied by shareholder deadlock) can paralyse a business. After all, it is at board level that a business is truly run and if the board to your Company is not properly functioning then the business cannot properly function and is at risk of failure.

At Palmers Solicitors we try to seek practical and negotiated resolutions to board issues, however, we have experience in dealing with a variety of sometimes necessary steps including:

1. Removal of director(s)
2. Appointment of director(s)
3. Breach of statutory director duties
4. Breach of fiduciary director duties
5. Unfair prejudice petitions if there are ownership positions linked also.

It is the responsibility of Partners to define how a Partnership is run, which is often done using a properly drafted Partnership Agreement governing the Partners relationship, both with each other and with third parties.

However, where that is not done and no Partnership Agreement exists it often comes down to the Partnership Act 1890. Whilst the Partnership Act 1890 is without doubt useful law and assists in implying sensible terms within a partnership relationship where there are no express terms, each Partnership is often distinct and personal, and the terms implied by the law cannot fit every situation.

Inevitably therefore most partnership disputes arise because there is either no Partnership Agreement or the one that you have is not properly effective.

At Palmers Solicitors we specialise in all areas of partnership disputes, including those that most commonly arise being:

1. What happens when one Partner wants to leave a Partnership, but the other(s) do not? How much should you pay for their share? Can they take clients with them?
2. What happens when one Partner is not putting in the effort/not doing his or her job properly? Can you get rid of him or her? Can you reduce his or her profit share?
3. Who is responsible for the liabilities of the Partnership? Who can bind who and how?

While carrying out their duties, company directors can, on occasion, face allegations which require specialist legal support.

Equally, you may need to take legal action against an employee whose actions have amounted to a breach of fiduciary duties.