When commencing the commercial relationship, it is important for the parties to sufficiently consider the potential for disputes in the future and agree upon a fair and cost-effective method for dealing with these disputes.
The number one way to avoid a shareholder dispute is to have an adequate shareholder agreement. Not an ‘off the rack’ template. But one which adequately deals with the specific parties and their specific interests, rights and obligations.
Too often do we see shareholder disputes where there is either no shareholder agreement or a templated shareholder agreement which is not adequate for the particular circumstances.
Also, shareholders ought to ensure their values align with the co-shareholders at the outset. If values are not aligned, it may be worth considering the long term viability of the relationship.
For the shareholders involved, the disagreement is stressful. It can often result in significant time lost dealing with toxic issues between shareholders. Time that could otherwise be spent on meaningful endeavours within the business (or at home!).
This inevitably creates a difficult working environment often to the detriment of the goodwill of the business and staff morale.
The shareholder dispute may also cause business financial stress.
There are a number of mechanisms that can be adopted to resolve the deadlock between shareholders. The ideal mechanism will depend on the particular business (for example the type of business, company structure and relative financial strength of the shareholders).
We have prepared a Guide on the Five Ways to Resolve Shareholder Disputes. Take these as a starting point but consider the strategy from a short term and long term perspective before implementing a strategy.
Norling Law Lawyers are experts in advising on, and representing clients in litigation with shareholders, investors, directors and various corporate governance issues.
We routinely assist clients in relation to contested takeovers, derivative action claims, minority prejudice and oppression claims, shareholder agreement disputes and various contractual disputes.
We also routinely assist our clients to enforce their rights and entitlements under various legislation, for example, the Companies Act 1993.
We work with our clients to achieve their goals. Often our clients have many options in a shareholder dispute that they are unaware of prior to meeting with us. For example, a prejudiced shareholder can obtain a High Court order that mandates the other shareholder(s) to buy or sell shares at fair value, if the opposing shareholder has acted in a prejudicial manner.
We assist our clients to navigate the often complex legislative and contractual arrangements.
We deploy our expert knowledge in aggressively pursuing the rights of our clients.
We have experience at the District Court, High Court, Court of Appeal and Supreme Court. We have a good working knowledge of the processes and procedures of these various courts.
Our knowledge of these processes and procedures will be used innovatively with a results-focused approach. We are committed to the application of this knowledge the best advantage of our clients.
In recognition of our specialist knowledge and results obtained for our clients, Norling Law has been recognised in the 2018 and 2017 New Zealand Law Awards as a leading Litigation and Dispute Resolution Specialist Law Firm. Brent has also been recognised in the New Zealand Law Awards individually in 2014, 2015, 2016, 2017 and 2018.
In 2019, Norling Law was a winner of the Innovative Firm of the Year Award.
We recognise that litigation can be protracted and expensive. We are focused on providing strategic advice at all stages. This will reduce the delay and cost of litigation. In most cases, commercial settlements are the best outcome for all concerned. Where appropriate we facilitate alternative dispute resolution strategies that suit our clients’ needs.
Please refer to our People for more information on who we are, our experience and how we can help you.
We offer a no obligation legal consultation where we can discuss:
We meet client objectives with a focus on excellence.
A shareholder dispute arises when disagreements occur between shareholders over the management, direction, or financial matters of a company. These disputes can disrupt business operations, damage relationships, and threaten financial stability if not resolved promptly and effectively.
Preventing shareholder disputes begins with clear communication, aligned expectations, and comprehensive documentation. Establishing a detailed shareholder agreement, maintaining open dialogue and written records, and addressing potential issues early can significantly reduce the risk of disputes.
A well-drafted shareholder agreement should address ownership structure, decision-making processes, dispute resolution mechanisms, exit strategies, rights and obligations of each shareholder, and procedures for handling changes in ownership. Including these elements can help minimise misunderstandings and prevent conflicts.
Common triggers include differences in business vision, unequal contributions of time or capital, disagreements over financial management, unclear roles and responsibilities, and breakdowns in communication. Personal conflicts and changes in personal circumstances can also contribute to disputes.
Deadlocks can be resolved through various mechanisms such as negotiation, mediation, arbitration, share sale agreements, or Court intervention. Including specific deadlock resolution procedures in the shareholder agreement can provide a clear pathway when disagreements arise.
Options include direct negotiation, mediation, arbitration, or pursuing legal action if necessary. Early engagement with legal counsel can help assess the situation and determine the most effective strategy for resolution while protecting the business and shareholders’ interests.
Norling Law provides expert legal advice and representation in shareholder disputes, offering strategic guidance, negotiation support, and litigation services where required. Our team works to protect your interests and achieve effective resolutions.
If no shareholder agreement exists, it is essential to seek legal advice promptly. Norling Law can help assess the applicable company law, shareholder rights, and available remedies, and guide you through negotiations or legal processes to resolve the dispute.
A lawyer provides expert advice on legal rights and obligations, facilitates negotiations, drafts settlement agreements, and represents clients in mediation, arbitration, or court proceedings if necessary. Legal expertise helps ensure disputes are handled efficiently and in accordance with the law.
Shareholder disputes can escalate to litigation if not managed properly. Early intervention, clear shareholder agreements, open communication, and alternative dispute resolution methods such as mediation or arbitration can often prevent the need for costly and protracted court proceedings.
Gain clarity and direction in your matter from a senior solicitor.
In a consultation, you will receive:
✔ Clear Insights – understand your legal and strategic options.
✔ Pathways to Resolution – explore practical next steps tailored to your situation.
✔ Your Best Interests First – this session is about strategy, not legal advice.
Takeaways: Personalised legal options from an expert solicitor for you to take further in an engagement with our team, or act on independently.
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