Shareholders can be of any size and number irrespective of the number of shares they are holding. There are holders who own a number of shares in any public company or they could be anyone from your family’s private company.
Now, what does it mean by shareholders dispute?
In simple words, any disagreement between the shareholder or even the owner of the company, regarding any governance or some other policies operations and financial details. As a matter of fact, all the shareholder have some of the stakes, therefore the situation is more like to get heated and complex.
Here are some of the most common types of reasons for shareholders dispute:
Breach of the Agreement
This is the most common reasons shareholders selling their shareholding in violation of the agreement. Breaching the agreement could be as serious as selling the rights of the shareholdings. Other common reasons could be if one shareholder wants to break the agreement against other shareholders will.
Not Agreeing with the Direction
This is considered the most common type of shareholders dispute and it can happen in the family corporations as well. Any decision on the direction or even the decision of ceasing the operation can bring the flare between the holders. There are other reasons as well, for instance, sudden termination of the right or even moving the business premises or location domain, this can also trigger the dispute.
In a privet corporation, the shareholders are liable to perform fiduciary duties to each other, even if they are employed by the organization. The shareholders are liable, to be an honest and open manner and maintain loyalty with other shareholders. For almost all the shareholders, who have any conflict of interest with others, can raise this issue to a further extent.
No Respect for Minority Shareholders
In case of a private or organization, the minority shareholders have very minimal authority in the board while seeking any change with respect to the majority shareholders. However, many statutory guidelines protect the rights of minority shareholders. In such a case there can be a conflict between the interests as they possess no right to voting rights in the board, so, they can run into shareholders dispute.
Compensation and Contribution
Practically the shareholder-employees need to be paid in a completely fair manner depending on the industry and type of organization and their experiences. When that doesn’t happen and the employees are not paid accordingly the conflict between the shareholders may arise.
In a similar way when the same thing repeats whether in terms of monitory contribution or sweat contribution the chances of running into shareholders dispute in inevitable.
Considering all the aspect a shareholders dispute can be avoided by simply drafting a strong and clear shareholders agreement from the beginning. If you need any help, in that case, you may contact some legal attorney and seek guidance to ditch the further conflict between the shareholders.
If you are in problem you can contact a Shareholder Dispute Lawyer in Canada.