Director Disputes

Twelve Tabulae corporate espionage and director disputes solicitors

In the world of business, disputes among company directors can arise unexpectedly, requiring internal corporate investigations, threatening the stability of a company.

When disagreements escalate, it’s crucial to have a team of experienced director dispute solicitors who can navigate the complexities of commercial law and company regulations.

Simon Caltagirone, Head of White Collar Crime and Corporate Disputes, understands that when faced with a business dispute, you require more than just legal expertise.

What Happens When Directors Disagree?

Director disputes are multifaceted and can stem from various issues including:

• Differences in strategic direction
• Lack of day to day involvement or control issues
• Financial disagreements
• Allegations of misconduct, fraud, or money laundering
• Conflicts of interest or breaches of duty

Without proper resolution, these conflicts can paralyse decision-making, disrupt operations, and damage the company’s reputation. Disagreements can lead to a breakdown in communication, hindering the company’s ability to make critical decisions and function effectively.

Twelve Tabulae offers expert legal support to navigate and resolve corporate conflict efficiently. Getting the best dispute resolution requires an understanding of your business and sector, and an appreciation of your commercial goals.

How to Resolve a Director Dispute

Resolving a director dispute requires a structured approach that considers the legal, financial, and strategic implications for the company. At Twelve Tabulae, we begin by assessing the nature and severity of the dispute to determine the best course of action.

We ask key questions to guide the resolution process:

• Nature of the Dispute – Is this a simple disagreement over company strategy, or have directors breached their fiduciary, contractual, or legal duties?
• Director Removal – Are you seeking to remove a director, or is the goal to mediate and find a solution?
• Shareholding Structure – Do the directors involved also hold shares in the company? Is there a 50:50 shareholder deadlock, making decisions impossible?
• Legal and Financial Liabilities – What risks does the company face if the dispute escalates into litigation?
• Existing Legal Agreements and Key Company Documents – Does the company have a Director’s Service Agreement, Articles of Association or a Shareholders’ Agreement?

These legal documents play a crucial role in establishing the framework within which a company operates, outlining the rights and obligations of all stakeholders.

At Twelve Tabulae, our team of experienced solicitors excels at reviewing and interpreting these documents, ensuring that all parties are held accountable for their actions based on the agreements they have signed.

This meticulous approach helps in providing clarity and direction during a director dispute, minimising potential misunderstandings.

Deadlock in Director Disputes

Deadlock arises when directors or shareholders are equally split in their votes. For instance, if two shareholders each hold 50% of a company’s shares, neither party has the majority required to pass resolutions. This can bring business operations to a standstill.

Resolving a director deadlock is complex, and courts often order the company to be sold to the highest bidder as a resolution. However, alternative solutions such as mediation, share buyouts, or negotiated agreements may help avoid litigation. Our team at Twelve Tabulae can guide you through the best course of action to protect your interests.

Director Disputes: Performance Issues

If a director is underperforming, dismissal is not always straightforward. Without gross misconduct, companies must follow proper employment law procedures, including:

• Performance management and disciplinary warnings – Failing to follow due process can result in an unfair dismissal claim.
• Reviewing director service agreements – If an agreement states that dismissal as an employee results in automatic resignation as a director, this simplifies the process.
• Addressing directorship vs. shareholding – A dismissed director may still retain their shares unless a legal agreement compels their transfer.

Navigating these complexities requires a clear legal strategy, and Twelve Tabulae ensures compliance while safeguarding company interests.

The Dishonest Director: Addressing Fraud and Misconduct

When a director engages in fraudulent activities such as embezzling company funds, the response must be swift and legally sound. Steps to handle a dishonest director include:

1. Immediate suspension – If company policies allow, suspending the director while an investigation takes place.
2. Conducting an internal investigation – Gathering evidence to establish misconduct.
3. Disciplinary hearing – Providing the director with an opportunity to respond to the allegations.
4. Decision on dismissal – Based on findings, proceeding with lawful termination if necessary.

However, dishonest directors may attempt to block suspension or dismissal by requiring a board resolution. If another director supports them despite strong evidence, this could constitute a breach of fiduciary duties. The dishonest director may still file claims in the Employment Tribunal or High Court, leading to additional legal costs. Our legal team helps businesses prepare strong defenses against such claims.

What Happens to the Shares?

Under standard Articles of Association, a dismissed director typically retains their shares. This can lead to ongoing influence or disruption within the company. However, companies with shareholders’ agreements often avoid this problem by including provisions for automatic share transfer upon cessation of directorship or employment.

If no such agreement exists, the company may need to negotiate a share buyout or explore legal options to compel transfer. Our solicitors can advise on the best approach to ensure business continuity.

Why Choose Twelve Tabulae for Director Dispute Solicitors

Choosing the right solicitors for director and shareholders disputes is paramount to safeguarding your business interests and resolving conflicts effectively.

Our approach focuses on finding amicable solutions through negotiation and mediation, whenever possible. By encouraging open dialogue and compromise, Twelve Tabulae aims to preserve the relationships among directors and shareholders, thus preventing further harm to the business.

However, when negotiations prove unfruitful, we are prepared to take the matter to court, ensuring that clients’ interests are protected through every legal avenue available. Selecting the right legal team is crucial for safeguarding your business. Here’s why Twelve Tabulae stands out:

• Industry-Specific Expertise – Our solicitors specialise in commercial law and corporate conflict resolution.
• Proven Track Record – Successfully handling shareholder and director disputes across various industries.
• Thorough Legal Analysis – We meticulously review and interpret company documents to strengthen your case.
• Alternative Dispute Resolution – Prioritising mediation and negotiation to minimise business disruption.
• Strategic Litigation When Necessary – If court proceedings are required, our litigators aggressively defend your rights.
• Client-Centered Approach – Tailored legal strategies aligned with your business goals.

Director disputes require swift, strategic action. Simon Caltagirone, Head of White Collar Crime and Corporate Disputes, is the trusted partner you need by your side for expert legal guidance to navigate complex conflicts. Contact us today.