Nowadays, it is common for businesses to be owned by multiple individuals or organizations through investments. Suppose you or your business partners have agreed to sell some shares to private individuals/organizations who may wish to invest in your business. In that case, it is crucial to have a shareholders’ agreement in place to make both parties aware of their rights and responsibilities. The agreement must also state how disputes will be handled, including how these disputes may be resolved. Legal consultants in Dubai can help you write or review a shareholders’ agreement to ensure that everything is clear for the parties involved before the contracts are signed.
What are the common causes of shareholder disputes?
When you have more people making decisions for a business, the
decision-makers will inevitably have disagreements on how they must proceed.
Here are some of the most common causes of shareholder disputes you need to
know:
1. Breach of the shareholders’ agreement
Since the Shareholder Agreements is a contract for all parties
involved in the business, any action that violates any of its terms is
considered as a breach and may result in a contract dispute and sometimes
litigation. Whether it’s a violation of the sale of restricted shares or
failure to fulfill one’s responsibility as a shareholder, you may need to
consult with a shareholder dispute lawyer to come up with a
resolution that is fair for all parties.
2. Majority vs. Minority
Since they have more shares in the company, many shareholders
get to vote on the big changes that will happen to the business. Minority shareholders
are mostly at a disadvantage as they are often not included in decision-making
or voting, even when they are mostly affected by the changes that will occur.
Whether you’re a majority or minority shareholder, you may consult with
the best lawyer in Dubai
to help you have a better
understanding of the terms in the agreement before signing it.
3. Managerial Issues
Managerial decisions are often one of the major causes of
disagreement among shareholders, mostly because these decisions often affect the
company’s direction. Any decision that may increase or decrease the value of
the shareholders’ investments may lead to major disputes among the parties
involved, especially when there is a conflict of interest. To avoid any
negative impact due to these disagreements, companies should have a shareholder’s dispute resolution procedure.
This way, it is easier to address everyone’s issues and differences.
If you need assistance in resolving shareholders’ disputes, Motei and Associates can
provide you with the legal services you may need.
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