Watford Solicitors

How can a shareholders’ dispute be avoided ?

In short, the best way to seek to avoid a dispute between shareholders is to have a clear, well considered shareholders’ agreement. Amongst other things, a good agreement will cover:

• financing for the company
• policies on dividends, directors’ fees and salaries
• responsibility for different areas of the business
• the company’s key objectives
• necessary authority and procedures for shareholders to take certain actions such as borrowing or incurring costs
• potential future issues such as death, sale of shares and other possibilities.

Quick tips for companies which may be insolvent

1. Don’t take chances – take advice as soon as you believe the business debts may not be repayable

2. Keep creditors informed

3. Keep the situation under constant review and document the plan and process you are following if you are seeking to avoid insolvency – this may be important to avoid allegations of wrongful trading in the future

4. Treat creditors equally no matter how much one or more creditors may pressure you or if you feel some deserve to be paid more than others.  Failure to treat creditors equally can lead to personal liability and the creditor may face a claim from liquidators for repayment of any preferential payment.

Return to main Watford business dispute page ?