Shareholder Disputes

stock-figures-1A shareholder is someone who owns shares of stock in a company and is an integral part of a company.

While not required at law, it is generally good practice for a company to have a shareholder agreement. A shareholder agreement will be the first point of information to shareholders. Additionally, the company’s constitution should set out how disputes are to be resolved. If the company does not have a constitution the ‘replaceable rules’ apply. Failing this, theCorporations Act imposes fiduciary duties on the directors of companies and other obligations.

Shareholder disputes arise over a number of issues including:

  • disagreement over business decisions;
  • unequal positioning of minority shareholders;
  • oppression of minority shareholders;
  • unequal distribution to shareholders;
  • failure to pay dividends;
  • wrongful transfers;
  • wrongful acquisitions; and
  • fraud.

Usually, shareholder disputes can be resolved through following the dispute resolution process set out in the shareholder agreement or company constitution. However, not all shareholder disputes can be resolved this way, at which time it may be necessary to pursue other means of resolving the dispute such as Alternative Dispute Resolution (ADR).

Our team at Ramsden Lawyers can help facilitate resolution of a shareholder dispute through ADR including:

Negotiation: either formal or informal, between the parties, with or without legal representation.

Mediation: an independent mediator helps guide the parties to decide the dispute. The opinion of the mediator is non-binding.

Arbitration: an independent arbitrator decides the dispute. The decision of the arbitrator is legally binding.

For further information on Shareholding see:

ComLaw – the Corporations Act 2001 (Cth).

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