24 Aug 2026
Peterborough office
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10 Ironmonger Street, Stamford Lincolnshire, PE9 1PL
01780 752 066 01780 762 774 enquiries@hegarty.co.ukOakham office
66 South Street, Oakham Rutland, LE15 6BQ
01572 757 565 01572 720 555 enquiries@hegarty.co.ukMarket Deeping office
27a Market Place, Market Deeping, PE6 8EA
01778 230 120 01778 230 129 enquiries@hegarty.co.uk24 Aug 2026
A disagreement between shareholders can quickly become more than a difference of opinion. When communication breaks down or important business decisions cannot be made, the dispute can begin to affect the company's day-to-day operations, its employees and, ultimately, its value.
If you are currently involved in a shareholder dispute, you may be unsure about your rights, what action you can take or whether the situation can be resolved without going to court.
Taking advice at an early stage can help you understand your position and identify the most appropriate way forward. In many cases, a carefully considered approach can resolve a dispute before it causes lasting damage to the business.
The first step is to establish your legal and commercial position before taking action.
It can be tempting to respond immediately when relationships have deteriorated, particularly if you feel you have been excluded from the business or another shareholder is acting unfairly. However, decisions made at this stage can have significant consequences.
Before responding, it is important to understand:
A solicitor experienced in shareholder disputes can assess the circumstances and help you decide on a strategy that protects both your legal position and your commercial interests.
Being excluded from important decisions is a common concern in shareholder disputes, particularly where shareholders are also directors and have historically been involved in running the company together.
You may find that meetings are taking place without you, information is being withheld or decisions are being made without your involvement.
Whether another shareholder is entitled to take these steps will depend on factors including your shareholding, your position as a director and the company's governing documents.
If you believe you are being deliberately excluded or disadvantaged, it is important to obtain advice rather than simply accepting the situation. In certain circumstances, the way a company's affairs are being conducted may amount to unfair prejudice under the Companies Act 2006.
A deadlock can arise where shareholders with equal or significant voting rights cannot agree on an important decision.
This can be particularly difficult in companies owned equally by two shareholders. If neither has sufficient voting power to make a decision without the other, disagreements can prevent the company from moving forward.
If you are facing shareholder deadlock, the starting point will usually be to review the company's:
These documents may contain provisions specifically designed to deal with deadlock or provide a mechanism for one shareholder to leave the company.
Where there is no clear contractual solution, negotiation or mediation may provide a way forward.
Concerns about company finances should be taken seriously.
You may suspect that another shareholder or director is taking excessive payments, using company funds for personal purposes, diverting business opportunities or making financial decisions without proper authority.
Directors owe statutory duties to the company under the Companies Act 2006. These include duties to act within their powers, promote the success of the company, exercise independent judgement and avoid conflicts of interest.
If you have concerns about financial conduct, obtaining advice promptly can help establish what information you are entitled to access and what steps may be available to protect the company and your interests.
It is also important to preserve relevant documents and correspondence and avoid making allegations that cannot yet be substantiated.
This is often one of the first questions shareholders ask when a relationship has broken down.
There is no general rule allowing another shareholder simply to force you to sell your shares because you disagree. However, rights relating to share transfers can arise under the company's Articles of Association, a Shareholders' Agreement or other contractual arrangements.
The circumstances can therefore vary considerably from one company to another.
Equally, if you want to leave the business, you may need to establish whether the other shareholders are required or willing to purchase your shares and how those shares should be valued.
Before agreeing to sell, transfer or surrender any shares, it is advisable to understand both their value and the legal implications of the proposed arrangement.
A negotiated buyout is often one of the most practical ways of resolving a shareholder dispute where the working relationship cannot be repaired.
Depending on the circumstances, one shareholder may purchase the other's shares, the remaining shareholders may collectively purchase them or, subject to the relevant legal requirements, the company itself may be able to buy back shares.
The valuation of the shares can become an important part of negotiations, particularly where the parties disagree about the company's value or whether a minority shareholding should be discounted.
Legal and professional valuation advice can help ensure that any proposed exit is properly structured and documented.
Yes. Many shareholder disputes are resolved without court proceedings.
Depending on the circumstances, options can include:
Solicitor-led negotiations can help move discussions away from personal disagreements and towards the legal and commercial issues that need to be resolved.
This may lead to an agreement about how the business will operate in future or allow the parties to negotiate an appropriate exit.
Mediation allows the shareholders to discuss the dispute with the assistance of an independent mediator.
It can be particularly useful where both parties want to avoid the cost and uncertainty of litigation or where preserving the underlying business is a priority.
Where the relationship has broken down beyond repair, agreeing the terms on which one shareholder leaves may provide the most commercially sensible solution.
An agreement can address matters such as the value of the shares, payment arrangements, resignations from directorships and any ongoing obligations between the parties.
Resolving a dispute outside court can provide greater flexibility and certainty, but the appropriate approach will depend on the circumstances.
There are situations where negotiation is unsuccessful or urgent legal action is required.
Depending on the facts, potential legal remedies may include an unfair prejudice petition under section 994 of the Companies Act 2006, claims concerning breaches of directors' duties or, in appropriate circumstances, a derivative claim brought on behalf of the company.
The court has wide-ranging powers in an unfair prejudice claim. One possible outcome is an order requiring one shareholder's shares to be purchased by another shareholder, although the appropriate remedy will depend on the circumstances.
Litigation can be costly and time-consuming, so the potential benefits and risks should be considered carefully before proceedings are started.
If a shareholder dispute is developing, gathering the relevant information can help your solicitor understand the position more quickly.
Where available, it can be useful to have:
You should also consider what you ultimately want to achieve.
For example, do you want to remain involved in the company? Would you consider buying the other shareholder's interest? Are you looking to leave the business yourself? Or is your priority simply to restore an effective working relationship?
Understanding your preferred outcome can help shape the strategy for resolving the dispute.
Shareholder disputes can become considerably more difficult to resolve once positions become entrenched.
They can also begin to affect areas beyond the immediate disagreement. Employees may become concerned about the company's future, important decisions may be delayed and relationships with customers, suppliers or lenders may suffer.
Seeking legal advice does not necessarily mean starting formal proceedings. Often, the value of early advice is understanding the strength of your position and determining how best to approach the other shareholder.
The sooner the available options are identified, the greater the opportunity may be to find a commercially sensible solution.
At Hegarty, we recognise that a shareholder dispute is not simply a legal issue. The outcome can have significant implications for your business, your investment and, in owner-managed companies, your livelihood.
Our Dispute Resolution team advises shareholders, directors and business owners on disputes ranging from disagreements over the management of a company to complex allegations of unfair prejudice and breaches of directors' duties.
Our first priority is to understand what you want to achieve. We can then assess your legal position and advise on the most appropriate strategy, whether that involves negotiation, mediation, agreeing a shareholder exit or pursuing or defending court proceedings.
Where a commercial resolution is achievable, we will work with you to pursue it. Where stronger action is required to protect your position, we can guide you through the options available and provide robust representation.
If you are already involved in a shareholder dispute, or believe one may be developing, obtaining advice at an early stage can help you understand your options and protect both your interests and the business.
Whatever legal support you need, our experienced and highly skilled solicitors and legal advisors are here to help. With expertise across a wide range of legal areas, we provide clear, practical advice tailored to you. What sets us apart is our commitment to understanding your needs and delivering the best possible outcome with a personal touch.
