Conflicts between shareholders and directors can arise can arise for many reasons. Some of the more common ones include:
- Differences over strategy or direction of the company.
- Personal grievances and power struggles.
- Shareholders seeking retirement packages.
- Disputes over service contracts and remuneration.
Disputes of this nature can prove extremely damaging to a company’s fortunes as a result of the internal instability caused by them. Court proceedings can be lengthy, cost-inflated and may cause permanent damage to the internal cohesion of the company. Alternative Dispute Resolution provides methods of resolving disputes which lead to swift, cost-effective and reconciliatory results that secure the long-term interests of the company.
Mediation is the appropriate method of resolving disputes of this nature. Your mediator is likely someone with experience in resolving such disputes. If an agreement is reached with the help of the mediator, this can be recorded in a legally binding document which can be enforced in the court, if one of the parties breaks it. The advantages of mediation include its relative cheapness compared to going to court, privacy (there is no public record) and speed. The courts encourage parties to attempt settlement of all disputes, including shareholder disputes. Other forms of ADR that may be used to resolve shareholder and director disputes include:
