Dealing With a Shareholder Dispute

When you’re running a business, you have to keep a lot of people happy: your employees, customers or clients, and of course investors, shareholders and banks.

A dispute with your shareholders can make life difficult, slowing you down when you need to take quick actions, and generating negative publicity that could harm your business. Even if the dispute is between two shareholders and doesn’t directly involve you as the person running the business it can still make meetings tense. It can make them even tenser if two of the major shareholders both have a hand in running the business!

You need to know the best ways to resolve a dispute between shareholders, to ensure you can focus on what you do best: running your business.

Communication

The best way to solve disputes is to make sure they never arise in the first place, and the best way to do that is to ensure you are communicating clearly at all times. Make sure your projections for future revenue, and actions you plan to take are sent out and discussed regularly, and if anything happens to change them, get in touch with your shareholders as soon as possible, rather than springing a downturn on them as a surprise.

As long as you have explanation for why revenue may have fallen short, and a plan to compensate for this, there’s no reason the issue should get out of your control.

A Clear Relationship

Another important thing is to lay the foundations early. Make sure you draw up a shareholders agreement that everyone can happily sign that makes everyone’s authority and responsibilities clear. You can always refer all parties in a dispute to this to make it clear if anyone is overstepping their boundaries, or not meeting their responsibilities.

Mediate Early, Mediate Often

Talking over contentious issues with an independent mediator can help to nip disputes in the bud before they have the chance to boil over into boardroom arguments.

Mediation services are a small but growing industry, and are well worth researching in the event that you need them. True, independent mediators are vital in resolving problems between shareholders: attempting to cut corners here could be disastrous. Informal discussions with someone who’s not experienced in helping people to reach compromise, or even worse who turns out to be biased in favour of one of the parties could exacerbate the problem rather than help to calm it!

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