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Ways To Minimize Damage Of Directors’ Dispute

Nov 20, 2019 | Articles

Director disputes

Director disputes aren’t uncommon and are one of the most complex problems a business can face. They can have a negative impact on business growth as directors get busy focusing on the dispute at hand, rather than the company’s performance. There are various reasons that can lead to director disputes, such as personal relationship conflicts, disagreements over the direction of the business, directors failing to carry out their duties, etc. At the same time, there are different options for resolving a dispute between directors. We are going to outline those in order to minimize their impact on your business.

Preexisting Shareholders Agreement- Having a shareholders agreement in place is the most important tip for minimizing the impact of a directors’ dispute, which will enable you to set out penalties for directors that have damaged the business besides the agreement governing the relationship between shareholders of your company. Not only will you be able to set out penalties for director breaches, but also have stipulations that require shareholders to engage in mediation in case of a dispute.

Take the help of a corporate attorney in Florida in creating a solid agreement that outlines a procedure for dealing with shareholder or director disputes. A breach can range from creating a rival business to stealing money from the business, and a shareholders’ agreement can allow a director to be forced out in case there’s a breach.

Mediation And Negotiation– Both sides coming together to discuss the issue can be an effective method in resolving the dispute within the company. Open the channels of communication and fix a meeting to discuss the issues at hand and the desired outcomes. You can also appoint a mediator who can help you reach a compromise or resolution. This is also a good time to seek legal advice on your position.

Court As The Last Resort– You may need to take the matter to court if all other attempts to resolve the dispute have failed as it is an effective last resort measure. Courts can take a number of actions (depending on the nature of the dispute and remedies required) ranging from financial penalties, removing a director to even putting a stop on the company.

Consider court only as a last option as legal proceedings are expensive and time-consuming, and can further make running the business more challenging.

It is advisable to contact a business dispute lawyer in Florida to ensure you are aware of your rights and obligations as a director. Whether you have a shareholders agreement in place or not, you should seek legal advice on the company’s position the moment a dispute occurs between directors as a professional will help you understand the options your company has and ways to approach the problem.

Clear communications between the parties and an open and calm mind can enable you to handle a director’s dispute quickly before it escalates. Contact Florida Entrepreneur Law on 954-800-0484 if you wish to take legal action. Our lawyers can advise you on the best course of action for your business in the event of a director dispute.

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