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3 ways to resolve shareholder disputes

Jan 14, 2021 | Business Disputes

In an ideal world, all shareholders would be in lockstep agreement as to how a business should operate. In the real world, different people have different opinions. In some cases, this can lead to conflict regarding a company’s direction. It’s important to understand what your options are when it comes to resolving shareholder disputes.

1. Mediation

Mediation is a form of alternative dispute resolution that enables parties to reach a solution on their own terms. A mediator serves as a neutral third-party who helps to guide discussions. The mediator’s role is to help parties reach a compromise. A mediator will not render a decision in the dispute. It’s up to you and the other party to agree on a path forward.

2. Arbitration

Arbitration is another method of alternative dispute resolution. Some shareholder agreements contain an arbitration clause. You should review your agreement to determine if arbitration is required in your case. Unlike a mediator, a decision issued by the arbitrator takes a side and is generally binding. In some situations, you may be able to appeal a decision made by an arbitrator.

3. Litigation

Litigation is, in many respects, the nuclear option. You will have to argue your case in court. Unlike mediation and arbitration, there will be clear winners and losers in litigation. The adversarial nature of a courtroom battle can make working with the opposing shareholder difficult, if not impossible, once things have been settled.

You can benefit from working with a legal professional regardless of which option you choose to resolve your dispute. A legal professional can help walk you through the process and protect your interests at every turn.