In any enterprise, shareholders play a vital role in ensuring smooth conduct of business. Shareholders are divided into two main groups, namely the minority and the majority. The former controls five percent to forty nine percent of the shares while the latter is usually the chief owner of the business.
Sometimes, minority and majority shareholders do not agree with certain issues. Since they practically own the company, majority shareholders make bigger decisions in the company and works harder to guarantee success. For their part, minority shareholders take minimal risks. At times, minority shareholders feel there is nothing they can do since their hands are tied and that their opinions are unimportant if they do not concur with business practices.
There are different tools available for resolving shareholder disputes. Known as dispute mechanisms, these are legal remedies resorted to by minority and majority shareholders to settle their differences.
Here is a brief description of the various mechanisms used in resolving shareholder disputes.
• Mediation - This involves a helpful approach that brings to light the subject of mutual concern. It allows the two parties to work towards negotiation.
• In negotiation, the disputing parties voluntarily pinpoints subjects of concern, weeds out alternatives for resolution, and come up with mutually acceptable agreement. In this mechanism, shareholder dispute attorneys are lenient.
• With arbitration, the disputing party settles their disagreements in the presence of a third party independent from the group. In this process, the evidences and arguments presented before the parties come to a final decision.
Take note, however, that even though there are dispute mechanisms, shareholder disputes will still end up in trial.
Litigation would determine the final pieces in the resolution of conflicts in interest of the shareholders. Court litigation is the best method for shareholders to put an end to their disputes and conflicts. By undergoing trial, any conflict be settled and achieve legal convenience.
In general, however, the most feasible solution for employees of a company is for a shareholder to purchase another share if there is a heated conflict over the direction that the firm should be taking. The shareholder intending to purchase the shares of the other must be properly informed to offer a reasonable price for the stocks they are purchasing in order to guarantee that the deal is more than reasonable for the one selling their share.
Aside from a buy-out, demerger is another method of resolving a dispute. This is the process of splitting the two companies owned by separate shareholders.
Likewise, shareholders can consider dissolving the business. This will require a court order. This is the last option when resolving disagreements.
During resolution of the dispute, the two parties should see to it that the assets as well as vital documents are secured. Sufficient tools should be formulated to resolve shareholder’s disputes. The dispute mechanisms must be formulated as a tool to be used by management for resolving future conflicts.
Whatever mechanism was chosen, both parties should bear in mind that the best interest of the company is the primary consideration. Any kind of dispute must be settled effectively, efficiently, and expeditiously.
About the Author:
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Fri, 23 May 2008 20:45:29 - 100%
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