directors/shareholders at loggerheads

directors/shareholders at loggerheads

Didn't find your answer?

Reasonably successful company where husband & wife are both directors and equal shareholders and both work in the business. One of them runs the workshop and the other deals with the admin. Marriage is breaking down and neither will co-operate with the other. Workshop says they need some equipment, admin doesn't agree and won't sanction purchase - job details aren't being communicated to admin so that invoices can be issued. One member of staff has already left because of the "atmosphere".

I can see the dispute ruining the business. I don't think either party is blameless and I have tried talking to them - together and separately - and they agree to cooperate which usually lasts less than a day.

I presume there is no way in which one of the directors/shareholders can acquire additional voting rights to force issues through? Does anyone have any suggestions/experiences they could share?

John Perry
John Perry

Replies (1)

Please login or register to join the discussion.

avatar
By jerry.west
13th Aug 2007 22:49

Is mediation possible?
First, is there a shareholders' agreement? Does the Mem & Arts say anything pertinent? If not, did they convert from a partnership and was there a partnership agreement (morally not legally binding)?

Assuming none of the above, then there's little to be done without their agreement, So the question is how best to achieve lasting agreement. It's probably in no-one's best interest to let the company fold (even if one party is using this as a part of a divorce negotiation strategy). I suggest ringing ACAS (08457 47 47 47) and asking about their mediation service (http://www.acas.gov.uk/index.aspx?articleid=1011).

The problem with forcing the issues is that it often escalates out of control and can all too easily end up in court, with either an aggrieved party seeking a just and equitable winding up or a frustrated director seeking compulsory purchase of shares from another who is acting in a way demonstrably prejudicial to the success of the company. Neither option is cost effective or desirable for a small company.

This is a tricky situation; good luck.

Jerry

PS: You might also review the CEOs Diary for February and March 2004 and subsequent issues. I presume the removal of both directors from active operations is not plausible in this case, however.

Thanks (0)