Boardroom disputes can occur regardless of the size of the company. A smooth resolution is desirable in any event in order to prevent further damages to the shareholders, stakeholders and/or the company.
There are several key documents that ought to be considered prior to taking action (e.g., Service Agreement, Article of Association and Shareholders’ Agreement).
It is a common practice for a shareholder to be a director of the company at the same time. Therefore, the employment law aspect must be thoroughly considered. Failure of which could amount to wrongful dismissal, unfair dismissal and/or whistleblowing. There are only a small number of ways to remove an a director (e.g. voluntary resignation or via the articles of association).
Is a good practice to deal with the departure by way of a settlement agreement if the shareholder is also a director. Not only will this stipulate the terms of the departure, but this will also protect both parties’ interests during the entire process and protect the company post departure.
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