When a company goes public, it is beholden to the desires of its shareholders. Unfortunately, those shareholders don’t always get along. Disputes among these parties can spell disaster for businesses, so it’s important that you understand how to deal with disputes among shareholders in a meaningful way. Below are a few methods of dispute resolution that might help you.
Hold a Meeting
The first step to dealing with any kind of shareholder dispute is figuring out where everyone stands. One of the best ways to do this is to get the parties who are in disagreement together and to allow them to negotiate on their own. This is a common first step that does resolve most disputes, though there is no guarantee of a binding agreement here.
Look at the Paperwork
The next step is to look at your corporation’s articles of association. This is a good time to contact your corporate lawyer, as he or she might be able to explain the mechanisms by which disputes can be solved and the consequences of either party moving forward with an adverse action. It is exceedingly common to find that many disputes can be solved by taking a look at the documents that they have already agreed to follow.
Go to Mediation
While putting the two parties in a room might not lead to fruitful results, having them talk with a neutral third party might. Hiring a mediator who has experience dealing with corporate matters can be a great way to create effective solutions for this type of problem. Note that mediation decisions are binding, but that neither party is obligated to come to an agreement during the mediation process.
Make an Offer
If all else fails, it may be time to buy out one of the feuding parties. Making an offer based on a fair market valuation is a good way to bring a dispute to an end. This is not always enough to end a disagreement, but it may give dissatisfied parties a way to get out while still being able to save face.
It’s vital that you end shareholder disputes as soon as possible. Check out your own paperwork, try to get them to talk it out, and don’t be afraid to buy someone out if it will keep things stable. Though you can’t solve every problem, taking action quickly is usually the best way to ensure that you don’t have to deal with shareholder revolt.