Director Maximiti Limited
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The accountant’s role in director and shareholder disputes

How can accountants help to mediate boardroom disputes? Norman Younger explores the accountant's role in achieving a calm and collected work environment.

4th Jan 2021
Director Maximiti Limited
Columnist
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Businesses are subject to the vicissitudes of everyday commercial life, often beyond their control. Accountants, as trusted business advisers, share their commercial knowledge and acumen with clients to give their insight and guidance on commercial and taxation matters, helping to navigate an uncertain world.

While everybody accepts uncertainty, there is one area of a business that is very much within the control of the owners and that is the boardroom. Although we read of such disputes in the financial press on a daily basis, it is regrettably not confined to multinational companies, and when it does rear its ugly head in a smaller enterprise the capacity to destroy the business and wreck the lives of its owners is not far behind.

Strip out the high drama and entertainment element of the country’s most famous boardroom, chaired by Lord Sugar, and you’ll find a place that is (or should be) calm and collected, but is regrettably underrated.

Enter the accountant.

For many advisers the closest they get to the boardroom is assisting with the annual Companies House declaration, but there is a critical role for them that is too often overlooked.

Preventing, managing, and resolving boardroom disputes is something that the company’s accountant is ideally placed to do.

Such disputes involve directors and shareholders, although senior management could also be a disgruntled party.

When was the last time you checked up whether there is an adequate shareholders’ agreement or a mechanism to deal with the differing roles of directors, especially as they grow older and might be contemplating a reduced role as retirement hits their radar?

Have you ever had a conversation about whether the captain has ever considered if he or she is steering a happy ship? 

There are classic cases of “a stitch in time saves nine”, but like making a will, these are issues in the boardroom that many find unpalatable to face.

When discord breaks out it’s time for the accountant to rush to scene, 999 style. Not unlike the “golden hour” in a medical trauma, the sooner the flames of a dispute are tackled, the less damage the business will sustain. As a trusted adviser the accountant is ideally placed neutrally to bring the feuding parties back together. You need to prevent matters escalating to threats and the spectre of going to law, bringing in professional mediators with whom you can work in tandem.

Mediation is ideally suited to boardroom disputes, where the crux of the matter usually goes beyond the financial and contractual claims of a commercial dispute but has a greater element of simmering unhappiness and a clash of personalities.

Post dispute the accountant performs the role of UN peacekeepers, keeping an eye on the implementation and working of any agreed solution.

Finally, it is worth mentioning that when the accountant steps into the ring, all the parties understand the impartial role of the accountant and that they are working on behalf of the company and not for any particular party alone.

 

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