Partnership and Shareholder Disputes

Disputes between business owners are difficult for all concerned. At the outset you no doubt feel you and your business partners will be in partnership for life, but unfortunately no one can determine the future.

Partnership Disputes

It is inevitable that partners have disagreements from time to time. Partnership disputes are often the most complex disputes, and if there is no formal partnership agreement the parties may need to refer back to the Partnership Act 1890. Common partnership disputes involve:

  • Secret profits - A partner is not entitled to make secret profits from their business without the consent of their fellow partners. If one does then it may justify expulsion or at least having that profit paid over to the partnership.
  • Management/ personality conflicts - Often the partners change and you can no longer work with the people with whom you once had so much in common. It may be possible to expel one partner to allow the others to continue the business, or to dissolve the partnership to make sure each partner gets their fair share from the business they have helped build. In some cases, it may be necessary to seek the assistance of the Court to dissolve and wind up the partnership.
  • Post-dissolution issues - After the dispute one partner may wish to continue the business, and this may lead to all manner of problems. It is not uncommon for partners to have injected different working or actual capital at the outset, and this may cause difficulties. The Partnership Act 1890 states that unless there is a contrary agreement all capital and working profits and losses are to be shared equally, and this may well be inequitable to the partnership which has been developed.

Shareholder Disputes

Disputes involving shareholders can cover a variety of issues, such as the payment of dividends. The most common disputes involve situations where majority and minority shareholders disagree. Often the minority shareholders are of the opinion that decisions are taken which unfairly prejudice their position as a minority shareholder, and want to take action in respect of this.

How we can help

Ownership disputes cost time and money, place the individuals under tremendous strain and can have a devastating effect on the business. At Spratt Endicott we are able to advise you how to best deal with the issues and your fellow business owners. In our experience, negotiations or mediation are often capable of resolving the issues, without the need to resort to formal Court action. However, in the event that negotiations or mediation are incapable of resolving the issues, we are able to assist you with regard to applications to the Court to expel a partner or wind up the partnership or company.

Getting in touch

For more information on how we can help resolve your dispute, please contact David Whiting at our Banbury office on 01295 204105, or email dwhiting@se-law.co.uk.