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Shareholder Dispute Unit - Taylors Solicitors Legal Services

Shareholder Dispute Unit

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.

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Tony Catterall
Senior Partner

Contact Details:

Office: 01254 297940
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Andrew Livesey

Andrew Livesey

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Office: 0161 200 5697
Mobile: 07884 231375
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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.

Please contact Tony Catterall or Andrew Livesey on 0844 8000 263 for further information as to how our Shareholder Dispute Unit may be able to help you.

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.

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