Directors' Disputes
Directors’ disputes can occur when disagreements between a business’ board of directors arise.
Sometimes these disagreements can relate to the way the business is managed, to its strategic direction, to governance or compliance issues. Sometimes they arise because individuals don’t agree on specific decisions the board has made or because some directors think that their fellow directors aren’t fulfilling their responsibilities. Regardless of the reasons, a directors’ dispute can have a significant impact on the business’ ongoing performance.
Not only do disputes slow up the directors’ ability to make business critical decisions quickly and efficiently, but they can also affect morale, not only in the boardroom but across the business. This can impact operational and financial performance. Externally, news of a dispute can tarnish a business’ reputation and even cause uncertainty within the business’ target market.
In the most severe cases, the dispute could result in costly and disruptive legal action or even insolvency.
This is why it is essential to act as soon as a directors’ dispute arises. You need to minimise its impact and come to a swift resolution. This is where we can help.
If you are concerned about a possible directors’ dispute, please contact our experienced commercial litigation team today.
How do you resolve a directors’ dispute?
If a directors’ dispute has arisen with your board, the best course of action will depend on the circumstances.
- Have the directors involved simply had a disagreement or have they acted unlawfully and/or in breach of their fiduciary or contractual duties?
- If the director is also a shareholder, are they in breach of any shareholders’ agreement?
- Does the dispute warrant the removal of the director/s?
- Are you at deadlock?
Depending on the situation, the next steps could be:
- Try to resolve the situation internally. Sit down and work through the issues informally between the parties involved.
- This allows the parties to air their points of view under the facilitation of a qualified third party mediator.
- In an arbitration all parties will present their points of view to an independent arbitrator who will make a legally binding decision based on the evidence they hear.
If these attempts to resolve the dispute fail, you may have to consider legal action and pursue a resolution through the courts.
We strongly recommend that you don’t take any action without first taking legal advice. The wrong option - or even the right option executed incorrectly - could exacerbate the situation and weaken your position.
What types of directors’ disputes could we help you resolve?
As we’ve said, disputes can arise for a variety of reasons, but the most common causes we see include differing opinions on the business’:
- Strategic direction
- Financial management or performance
- Management performance and results
- Corporate governance practices, including the membership of the board and each directors’ responsibilities
- Responsibility to comply with specific legal requirements
- Potential conflicts of interest - where it is felt a director may be conflicted from acting in the company’s best interests because of other interests.
Why should you talk to us?
Our team is made up of highly experienced litigators. They are not only specialists in corporate and commercial law but also have extensive experience in resolving just about every type of corporate dispute.
We also have an accredited mediator on the team and so can help you explore alternative dispute resolution methods and, hopefully, help you avoid the time and expense of going to court.
