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Dealing with business, shareholder and partnership disputes

01 Mar 2018

You will know that disputes can arise within a business for a number of reasons. It does not matter what form your business takes, it could be a Partnership, a Company or a Limited Liability Partnership. It does not matter if your business is large or a two person smaller business. Even reasonable people who own and run businesses can fall out or suffer business relationship issues. The trick is to keep the damage to a minimum and, if at all possible, keep the business going. Where, as a last resort, the business has to fold, the team at DMH Stallard will act to ensure maximum value is extracted for you in relation to the assets. Assets can include trading names, vehicles, property, software, contracts with customers and bank balances.

What steps can you take?

1. When everyone is getting along fine and there are no problems, have an agreement drawn up. Partnerships will have a Partnership Deed/Agreement, and companies will have a Shareholders’ Agreement. These set out how the business will run, how decisions are made and profits split and what the partnership/ company owns.

2. Anticipate issues. Try and deal with them before they become a real issue.

3. When you feel that matters have reached impasse, there are business mentors you can turn to.

4. Finally, where all else fails, use the exit procedures within your partnership/shareholders' agreement.

5. If there is no partnership agreement in place, then seek legal advice.

As solicitors in this field in the Guildford area for more than 40 years, and with an experienced wider team across London and Sussex too, we can assist.  We will aim to keep the business going and to ensure that you get your value out of it, if and when you leave. If the business must be wound up or dissolved, we will ensure you get the most out of the assets and recover the value you have put in.

Spotting the trouble early

1. Most problems revolve around money. For example, one partner or shareholder feels that they are putting more into the business than they are getting out. Alternatively, you may feel that your business partner is not pulling their weight.

2. Other problems can revolve around conduct. One shareholder or partner may be misbehaving. We have advised where one party has been taking business opportunities to their own benefit to the detriment of the company. In one case we have dealt with issues of outright defrauding of a partnership.  

3. Health issues can arise. We have advised where one partner is dealing with issues of alcoholism and long term absence through illness and stress.

4. Also, and perhaps the most problematic in many ways, where a party simply loses interest in the business and fails to engage with the business in any meaningful way but insists on full payment of dividends or (in the case of partnerships) drawings.

The DMH Service Standard

We work with businesses: big and small; in all sectors from construction, to software design. We have advised companies turning-over millions to two-person partnerships.

We can deal with all of these quickly and, if possible, before they can escalate further and cause more damage. We will aim to respond to you same day. Initial consultations are free of charge and, above all, we try not to aggravate the situation. If we possibly can, we will de-escalate the situation and get a fair deal for you, without destroying the business. Sometimes, court action cannot be avoided, but it is very much the last resort. If the partnership/company cannot continue, we will work to ensure that you get the maximum value from any dissolution.

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