I am often called upon to arbitrate where there are disputes between 50:50 Director/Shareholders.
Like a marriage, people can fall out or just wish to go their separate ways but due to tensions, suspicions or just bad blood they struggle to find a sensible solution. This can only have a negative effect on day to day trading so you need to act quickly.
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In my experience the legal costs of fighting each other’s cases can be prohibitive and can often concentrate the mind to sorting out a seemingly intractable problem.
The options available will often depend on whether the Company actually has any value left in it. The longer the problem is allowed to fester the worse it will become and things can get messy. In some cases this can lead to the Company folding and a Liquidator being appointed who reviews the conduct of all the Directors with potentially serious consequences.
Problems that can arise:
- Action taken by any Director on behalf of the Company which has not been approved by the other(s) will not be authorised and will therefore be taken at the personal risk of the Director in question.
- If there are joint signatories on the bank account it may be impossible to make any payments
- There may be concerns as to whether the Company should continue to trade…one party may consider the Company is trading insolvently.
If you feel you are in deadlock and wish to explore how a negotiated settlement can be achieved please contact me or call me on 07778 999883 for a free confidential chat.