As a result of
significant client demand Taylors
are delighted to announce the launch
of a new dedicated unit specialising
in shareholder and partnership
dispute claims. The new unit will
work in tandem with Taylors’
thriving commercial dispute and IP
litigation teams.It is not
uncommon, in these recessionary
times, for disputes to arise between
shareholders in SME companies.
Taylors have substantial expertise
in acting for both companies and
shareholders (whether minority or
majority shareholders) in connection
with such actions, including for
example the Court of Appeal case of
Strahan v Wilcock which is the
leading case on minority shareholder
oppression.
Under s994 of the Companies Act
2006, a shareholder in a company who
believes he is being treated in an
“unfairly prejudicial” way is
entitled to seek relief from the
Court. This can arise, for example,
where the majority shareholder(s)
(i.e. the shareholders who
collectively have a greater than 50%
shareholding in the company) run the
company in a manner which reduces
the value of the minority
shareholding, exclude the minority
shareholders from the management of
the company, divert business to
another company in which they also
have an interest or pay themselves
excessive and unjustified
salaries/benefits.
The court will usually order in
such cases that the minority
shareholding be purchased at a fair
value by the majority shareholders
although that is not the only order
which can be made. The Court has
complete discretion and it is not
unknown for an order to be made
whereby the minority shareholder is
permitted to purchase the shares of
the majority. Winding up of the
company is the draconian last
resort.
Our team also receives regular
instructions to act on behalf of
those involved in partnership
disputes. We have a reputation for
delivering clear, effective,
practical and commercially astute
advice. We recognise that disputes,
whether between shareholders,
directors or partners can seriously
disrupt business. Our focus is to
work with you to keep such
disruption to a minimum by resolving
disputes as quickly and efficiently
as possible, enabling you to devote
time more properly to the
progression of your business.
Recent experience
The Shareholder Dispute Unit was
recently instructed by a company and
its majority shareholders following
a minority shareholder petition
being presented. After entering into
settlement discussions with the
minority shareholder concerning the
appropriate valuation of the shares,
settlement terms were agreed before
significant legal costs were
incurred, enabling the clients to
focus upon developing the business
without distraction.
We are instructed by a client who
is running, in parallel, both
minority shareholder and partnership
dissolution proceedings relating to
separate businesses in common
ownership. It came to our client’s
attention that his co-directors and
shareholders were considering
possible proceedings against him. We
immediately recognised that it would
be preferable for our client’s claim
to be commenced first, to give him a
procedural advantage. As such, court
proceedings were issued within a
matter of hours and are now
continuing.
We acted for the majority
shareholder and the company in
defending an action for royalties
brought under a Patent Licence by
the minority shareholder. The claim
was successfully resisted and we
negotiated the acquisition of the
minority’s shareholding.
We are acting for the minority in
a family company and partnership
dispute concerning the wrongful
transfer of the minority’s shares
and wrongful alienation of
partnership assets.
We acted for the majority
shareholders of a substantial
company (a “household name”
business) in rebutting a director’s
huge demands under a share option
scheme and successfully negotiated
the director’s departure and the
acquisition of his shareholding.
A member of the team was involved
in the Court of Appeal case of Arrow
Nominees v Blackledge, involving
proceedings issued by the minority
shareholders in Bodycare (Health and
Beauty) Limited alleging unfairly
prejudicial conduct by the majority
shareholder. Due to the actions of
one of the minority in forging
documents to support the claim, this
became the first case in which the
proper response to the dishonest
conduct of litigation was considered
by the Court of Appeal in detail.
Such consideration included a
direction as to whether striking out
a claim on conduct issues would be
compatible with Article 6 (the fair
trial right) of the European
Convention in Human Rights and
remains the precedent authority on
these matters.
Please contact Tony
Catterall or Elizabeth Black on 0844
8000 263 for further information as
to how our Shareholder Dispute Unit
may be able to help you. |
