A shareholder dispute often arises gradually, but can have significant consequences for the company. When shareholders disagree about the direction of the company, block decision-making, or no longer trust each other, the continuity of the BV comes under pressure. This article explains what a shareholder dispute is, how it arises, and which solutions are possible.
When is there a shareholder dispute?
A shareholder dispute exists when shareholders fundamentally disagree on important matters within the company. This occurs in both small BVs and larger companies with multiple investors.
Common causes are:
- difference of opinion about strategy or growth;
- discussions about profit distribution or dividends;
- unequal effort or involvement;
- conflict between shareholders and the board;
- personal tensions that carry over into business.
Why a shareholder dispute is so far-reaching
An escalating shareholder dispute strikes at the core of the company. Decisions are not made, investments are postponed, and the confidence of employees and external parties declines. In practice, we see that shareholders often keep hoping for recovery for too long, while timely action is essential.
What do the articles of association and agreements say?
The first step in a shareholder dispute is studying the legal basis:
- the articles of association of the BV;
- a shareholders’ agreement;
- management or cooperation agreements.
These often set out agreements on decision-making, voting rights, dispute resolution, and exit. These provisions largely determine what options you have.
Shareholder dispute: practical approaches to resolution
1. Consultation and reallocation of agreements
At an early stage, consultation can lead to adjustment of agreements, for example about tasks, powers, or profit distribution. This prevents further escalation.
2. Record or amend agreements
If the parties wish to continue, it is advisable to re-record or clarify existing agreements. This prevents a recurrence of the conflict.
3. Exit or sale of shares
If cooperation is no longer feasible, a shareholder can exit or sell their shares. The valuation of the shares is often an important point of discussion.
4. Legal steps
When consultation does not provide a solution, legal steps may be necessary. In a shareholder dispute this may involve, for example, compelling disclosure of information, challenging decisions, or involving the court.
What if decision-making completely stalls?
In a 50/50 split, it is common for shareholders to block each other. This leads to a standstill of the company. Without clear agreements, legal intervention may be necessary 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;
- failing to lay down clear agreements;
- letting emotions prevail;
- litigating without a strategy;
- lose sight of the business.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs and investors with a shareholder dispute. We assess your position, advise on solutions and guide negotiations or legal action when necessary.
Also read more about our expertise in business law, our experience with disputes with business partners and international commercial disputes.
Costs and litigation funding in commercial disputes
In commercial disputes, we generally do not work on a no cure no pay basis. Business law proceedings require a careful legal and strategic approach.
However, that does not mean you have to bear the costs yourself. In many commercial 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:
- the attorney’s fees;
- the court fees;
- any expert costs;
- litigation costs during the appeal.
If litigation funding is granted, you as the 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 outcome, for example from (a portion of) the proceeds of the case. For you, this means that litigation is possible without you having to incur costs upfront or during the proceedings.
Litigation funding is particularly suitable for commercial disputes with:
- a clear legal claim;
- sufficient financial value;
- a realistic chance of recovery from the counterparty.
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 specializes in commercial disputes, including shareholder disputes and business collaborations.
Would you like to discuss how your shareholder dispute can be resolved?
👉 View the profile of Onur Arslan and get in touch directly.
Frequently Asked Questions
What should I do first if I am involved in a shareholder dispute?
The first step is to review the company’s articles of association, shareholders’ agreements, and other relevant documents to understand your rights and options. Consulting with a legal expert can also help clarify the best course of action based on your specific situation.
How can shareholder disputes be resolved without going to court?
Disputes can often be resolved through consultation and renegotiation of agreements, or by re-recording existing arrangements to prevent future conflicts. If necessary, shareholders may also consider exiting or selling their shares as a practical solution.
What legal actions are available if negotiations fail to resolve the dispute?
Legal steps may include compelling disclosure of information, challenging decisions, or seeking court intervention to resolve deadlocks, especially in cases where decision-making is completely stalled. An experienced lawyer can guide you through these options.
Are shareholder disputes more complicated in international companies?
Yes, international shareholder disputes can be more complex due to differences in Dutch law, cultural communication styles, and cross-border legal considerations. Consulting with a legal expert familiar with international corporate law is advisable in such cases.
