Disputes between business owners are among the hardest commercial disputes, because the parties are locked together, often were friends, and usually cannot simply walk away. But there are established routes through, and the commercial solution is rarely the same as the legal one.
Start with what you signed
The first step is always to read the shareholders’ agreement or partnership agreement, and the company’s articles. These often contain mechanisms for exit, valuation and dispute resolution that the parties have forgotten exist. What they actually say is frequently not what either side remembers.
The absence of an agreement
Where there is no shareholders’ agreement, you fall back on the articles and the Companies Act, which rarely produce the outcome anyone wanted. This is the single most common reason these disputes turn expensive — and the reason to put an agreement in place while everyone still gets along.
Unfair prejudice
A minority shareholder who is being unfairly treated — excluded from management, denied information, or having the company run for others’ benefit — can bring an unfair prejudice petition. The usual remedy is an order that their shares be bought at a fair value. These claims are powerful but slow and expensive, which is precisely why most settle.
Deadlock
In a fifty-fifty company where the owners cannot agree, the options narrow quickly. Without a mechanism in the documents, deadlock can end in a just and equitable winding up, which usually destroys value for everyone. A negotiated buy-out is almost always better, and mediation frequently unlocks one where direct negotiation has failed.
The commercial reality
Litigation between business owners is expensive, slow, and corrosive to a business that often still needs to trade while the dispute runs. Our first question is always whether a negotiated separation is achievable, because it nearly always leaves both sides better off than a fought outcome.