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Achieving resolution of boardroom disputes between directors
Should a boardroom dispute arise between the directors of a company that affects the running of the business, it is vital to resolve this as quickly and as smoothly as the legal position of the company allows. Failure to do so can damage the ability of the business to operate efficiently, and may affect the firm's reputation if the dispute becomes public.
The resolution of such a director dispute will involve finding either an amicable solution or removal of one or more of the directors in dispute. In either case, it is necessary to establish what the legal position of the firm is, which depends on a complex area of the law and on the setup of the company itself.
The articles of association of a company should set out the processes through which a director may be dismissed, but this must be examined together with the director service agreement. Both must be considered in terms of the relevant legislation, such as the Companies Act 2006, and the potential that the director to be removed may be due compensation for unfair dismissal.
The complexity and antagonism involved in this method may lead to a drawn-out process that, while legally accurate, continues to damage the interests of the business until the eventual conclusion of the dismissal. In many cases, it is wiser to negotiate a solution that satisfies both sides of the argument or, when that is not possible, one that allows one side to withdraw from the business under an arrangement which appropriately recompenses that withdrawal. Evaluating the arrangement as appropriate, too, depends on an understanding of the legal position of both sides within the law, the company's articles, and the contractual terms under which the director was recruited to the board.
Boardroom dispute services from JMW Solicitors' Employment Law department
Resolving disputes between directors, whether through negotiation or legal representation, is a specialism of the Employment Law department at JMW Solicitors. Our partner-led team has a successful track record of negotiating and advising on senior executive terminations, severance agreements, and restrictive covenants.
We pride ourselves on providing cost-effective and efficient services, ensuring that a difficult situation is resolved without unnecessary delay. At JMW, we can draw on the expertise of colleagues from relevant departments where complexities in specific cases make this necessary.
If you have an enquiry regarding ways in which our Employment Law team can support or advise you in a boardroom dispute, or provide related services for your business' legal needs, please contact us on 0345 872 6666 or complete our enquiry form.