Brown Borkowski & Morrow


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Different approaches to resolving shareholder disputes

No business is immune from shareholder disputes. Take the recent case of Royal Dutch Shell, which recently had to contend with a dispute involving shareholders feeling concerned about how the majority shareholder conducted matters with the Blackpool Football Club.

For the sake of the company, it is critical to find a resolution quickly and amicably. One such option available to business owners is litigation. For some cases, it may be the strongest yet most civil way to reach a resolution, and attorneys have the necessary qualifications to resolve a litany of disputes ranging from shareholder underperformance claims to breach of fiduciary duty claims. Many business owners worry about bringing litigation into the mix, especially if they know they will still have to work with these shareholders. There are other options available, and you should review all of them in detail to understand what would work best for your business. 


You may have had shareholders sign a contract before coming onboard your company. In many cases, this contract will contain an arbitration clause, which states any disputes must go in front of an arbitrator. Many business owners prefer this method because it helps keep the dispute private. Ultimately, the arbitrator will create a binding decision all parties involved must agree to. However, there are instances where the shareholders can successfully appeal this decision. 


Many times, the first course of action a business owner will take is to engage with mediation. This is typically the preferred method of resolving disputes if the shareholders will need to continue working together. The disputing parties will meet with a neutral third party. The mediator facilitates a discussion, so everyone has a chance to air grievances. With a mediator present, both sides can work through their issues, and in some cases, there will even be an attorney present. Numerous factors go into determining what will work best for each individual disagreement.