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Who is in the right in a shareholder dispute?

On Behalf of | May 19, 2023 | Business Litigation

Every individual owning shares of a company has rights as a shareholder, with those owning significant numbers of shares holding particular sway over decision-making processes. When shareholders come together, it is nearly inevitable that there will be a difference in opinion or that one party might infringe upon the rights of another.

Differing ideals and compensation inequality are just a couple of common causes behind many shareholder disputes. You can take steps toward resolving such issues by knowing your options for determining which party is in the right.

Review the shareholder agreement

Shareholder documentation is your first point of contact when looking to resolve a shareholder dispute, especially if one party stands accused of violating a contract. Namely, the shareholder agreement provides terms by which each party in a shareholder dispute must abide. If it is clear that one party is in violation of the terms of the shareholder agreement, then the agreement is also likely to provide guidance on how to remove or otherwise hold accountable the offending party.

Undergo mediation

When a resolution is unclear, an alternative dispute resolution method may be necessary. A thorough shareholder agreement may even outline a mutually-agreeable process for mediation or other similar resolution methods. Through mediation, the disputing parties can each make their case under the guidance of a skilled mediator regarding who is in the right while also enjoying privacy and confidentiality that is not guaranteed if the matter goes to court.

Arguing in circles might never make clear who is in the right in a shareholder dispute. Calmly reviewing the shareholder agreement and discussing the matter in mediation can bring the true details of a dispute to light.

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