A shareholder dispute often develops gradually, but can have major consequences for the company. When shareholders disagree about the direction of the business, block decision-making or no longer trust each other, the continuity of the private limited company (BV) comes under pressure. In this article, you will read what a shareholder dispute is, how it arises and what solutions are available.
When is there a shareholder dispute?
A shareholder dispute exists when shareholders fundamentally disagree about important matters within the company. This occurs in both small private limited companies (BVs) and larger businesses with multiple investors.
Common causes include:
- differences of opinion about strategy or growth;
- discussions about profit distribution or dividends;
- unequal commitment or involvement;
- conflict between shareholders and the board of directors;
- personal tensions that affect business operations.
Why a shareholder dispute is so far-reaching
An escalating shareholder dispute strikes at the core of the company. Decisions are not made, investments stall and the confidence of employees and external parties diminishes. In practice, we see that shareholders often keep hoping for recovery for too long, while timely action is in fact essential.
What do the articles of association and agreements say?
The first step in a shareholder dispute is to examine the legal basis:
- the articles of association of the private limited company (BV);
- a shareholders' agreement;
- management or cooperation agreements.
These often contain provisions on decision-making, voting rights, dispute resolution and withdrawal. These provisions largely determine what options you have.
Shareholder dispute: practical solutions
1. Consultation and redistribution of agreements
At an early stage, consultation can lead to adjustments of agreements, for example regarding tasks, powers or profit distribution. This prevents further escalation.
2. Recording or adjusting agreements
When parties wish to continue, it is advisable to re-record or clarify existing agreements. This prevents a recurrence of the conflict.
3. Withdrawal or sale of shares
If cooperation is no longer feasible, a shareholder can withdraw or sell their shares. The valuation of the shares is often a key point of discussion.
4. Legal action
When consultation does not offer a solution, legal action may be necessary. In a shareholder dispute, this may involve enforcing information rights, challenging decisions or involving the court.
What if decision-making comes to a complete standstill?
In a 50/50 situation, it regularly occurs that shareholders block each other. This leads to a standstill of the company. Without clear agreements, legal intervention may be needed to force a breakthrough.
Shareholder disputes in an international context
In international companies, a shareholder dispute can be extra complex. Foreign shareholders have to deal with Dutch law, while cultural and communication differences play a role.
General information about shareholder rights can be found at the Chamber of Commerce.
Common mistakes in shareholder disputes
- waiting too long to intervene;
- not recording clear agreements;
- letting emotions prevail;
- litigating without a strategy;
- losing sight of the company's interests.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs and investors in a shareholder dispute. We assess your position, advise on solutions and guide negotiations or legal proceedings when necessary.
Read more about our expertise in corporate law, our experience with business partner conflicts and international commercial disputes.
Costs and litigation funding in corporate disputes
In corporate disputes, we do not work on a no cure no pay basis in principle. Corporate law proceedings require a careful legal and strategic approach.
However, this does not mean you have to bear the costs yourself. In many corporate disputes, it is possible to make use of litigation funding.
We work with an independent litigation funder who – after a substantive assessment of your case – may decide to pay all litigation costs. This includes, among other things:
- attorney fees;
- court fees;
- any expert costs;
- litigation costs during appeal.
If litigation funding is granted, you as a client do not have to pay these costs yourself. The litigation funder bears the financial risk of the proceedings.
The litigation funder only receives compensation in the event of a positive result, for example from (part of) the proceeds of the case. For you, this means that litigation is possible without incurring costs in advance or during the proceedings.
Litigation funding is particularly suitable for corporate disputes with:
- a clear legal case;
- sufficient financial scope;
- a realistic chance of recovery from the opposing party.
We always first assess whether your case is suitable for litigation funding and discuss this transparently with you.
About the author
This article was written by Onur Arslan, lawyer and founder of Arslan Advocaten. He specialises in corporate disputes, including shareholder conflicts and business partnerships.
Would you like to discuss how your shareholder dispute can be resolved?