The owners and managers of any business will occasionally have disagreements. It’s the sign of a healthy business if they can challenge each other and company/partnership disputes can be resolved constructively.
Ultimately, disagreements are usually resolved in the best interests of the company. But sometimes directors, shareholders and partners fall out, and the relationship breaks down. Often this happens when one or more is discovered to have acted secretly – or is planning to do so – against the interests of the others. See our Guide to “Company And Partnership Disputes”.
It might be possible to resolve company/partnership disputes and through votes at board level. Or a resolution at a company general meeting. But if the dispute is fundamental to the future of the business, then there may come a point where there is no alternative. The business has to be brought to an end and formally wound up.
It is a reasonably straightforward process – in theory – to wind up a partnership and distribute the partnership assets to the partners. A limited company is a little more complicated to bring to an end. But with goodwill on all sides, it is can be achieved quite quickly. The ideal outcome is to end the business with a minimum of fuss, with all involved taking their share of the value of the business and moving on.
Matters can be much more serious. This might be if one of the directors or partners is discovered to be acting against the interests of the company, shareholders or partners. This may or may not involve dishonesty. You might discover, for example, that one of your fellow-directors is setting up or dealing with a rival business.
Boardroom and partnership disputes can be complex and involve contract, employment law and company law issues. Directors and shareholders should review the company’s Articles of Association, any Shareholder Agreement, board minutes and employment contracts. Partners should examine the partnership deed.
These documents may show how to resolve a difficult situation via the board of directors, a shareholders’ resolution, or a partners’ agreement.
However, it is important to take advice about a particular set of circumstances, and the best way of avoiding a dispute escalating and ending up in court.
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