A family-run business comprising of 4 directors (mother, father and two sons) have fallen out with one another.
The father and mother want to continue with the payment of interim dividends however the two sons do not want to continue with interim dividends.
The question therefore is who makes the overiding decision ?? if a majority cannot agree then are the interim dividends by default not approved for payment ?? Who wins ??
Paul Dorrington
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stalemate
Hi Paul - directors pay interim dividends and shareholders decide & declare finals. Ultimately therefore, as with most things the shareholders have the final say. You don't say if this is an equal 4 way share split, if so you have stalemate, if not the majority shreholders may win out.
Having said all that, things like rows over dividends or petty cash claims is often a symptom of their inability to run a business together and so perhaps they need a bit of guidance to iron out the real problems or decide, for the good of the business, to do something more drastic?
I almost agree with Paul
As Paul says, it's the directors that decide. However it is the voting power of the directors that matters, not the shareholders. So with 4 directors equally split, then there may be a casting vote allotted to the chairman.
If the individuals as shareholders have differing views and voting power, then ultimately it would depend on the power of the shareholders to change the board. At that point, it's likely that management of the company might start hitting problems!