Business · Shareholders and directors
Shareholder dispute? Your options, and what to do first
Minority shareholders and directors in dispute usually rely on the articles, any shareholders' agreement, the Companies Act 2006 (unfair prejudice, derivative claims and directors' duties) and, sometimes, just and equitable winding up. The earlier the documents are reviewed, the more options are available.
Written by Vanessa Challess, Solicitor, qualified 2003 · Last reviewed
Who this is for, and when to call
- You have been shut out of decisions, or removed as a director, in a company you co-own
- You and your fellow shareholder are split 50/50 and the business has stalled
- You think a director is taking money, business or opportunities that belong to the company
- You want to leave, or want a co-owner out, and cannot agree the terms or the price
Call before you resign, sign or send anything you cannot take back.
First steps in a shareholder dispute
Eight things to do, and not do, when it starts. Download them as a PDF.
01Gather the documents
The articles, any shareholders' agreement, your service agreement, the register of members, minutes and the latest accounts. Every shareholder can inspect the register of members (s.116) and the records of shareholder meetings (s.358) free of charge, and can ask for the last accounts (s.431).
02Do not resign or sign anything in a hurry
A resignation, a share transfer or a settlement letter can be very hard to undo, and may give away your strongest points. Take advice first.
03Work out who controls the votes
Who holds more than half the votes, and who holds 75% or more, decides who can remove a director, change the articles or block a decision. Our free shareholder control calculator (bonsai.law/tools/shareholder-control-calculator) shows it in a minute.
04Keep a record
Dated notes of meetings and decisions, and copies of emails. Keep what you write calm and factual: assume a judge will read it.
05Keep to your duties as a director
If you are a director, your duties to the company continue during the dispute, including avoiding conflicts of interest (ss.171 to 177). Do not take company property, money or data.
06Consider mediation early
Most shareholder disputes settle. The court expects the parties to have tried to resolve things, and can take a refusal to mediate into account on costs.
07Act promptly
No limitation period applies to an unfair prejudice petition, but the court can refuse relief after unjustified delay, other claims do have time limits, and evidence and money can disappear.
08Get advice on your options
A negotiated exit, a deadlock clause, an unfair prejudice petition, a derivative claim or, as a last resort, winding up. The right route depends on the documents and on what you want to end up with.
Who really controls your company?
Enter the shareholdings to see who can pass or block decisions on their own, and where a deadlock could bite.
Your options
Section numbers are to the Companies Act 2006 unless stated.
Negotiated exit
Most disputes end with one side buying the other out. A clear view of your legal position, and of what a court might order, is what moves the price.
Deadlock clause
If your shareholders' agreement or articles have one, it usually comes first: mediation, a buy-sell clause or an independent valuation.
Unfair prejudice petition
Where the company's affairs are run in a way that is unfairly prejudicial to your interests (s.994). The court can make any order it thinks fit, most often that your shares are bought at a fair value (s.996).
Derivative claim
A claim on behalf of the company against a director for negligence, default or breach of duty (s.260). The court's permission is needed to continue it (s.261), and any recovery goes to the company.
Removing a director
Shareholders can remove a director by ordinary resolution (s.168), with 28 days' special notice (s.312). The director can respond in writing and speak at the meeting (s.169).
Winding up
As a last resort, the court can wind the company up where it is just and equitable to do so (Insolvency Act 1986, s.122(1)(g)). It is rarely the best outcome for anyone.
What we do, stage by stage
Initial review
Fixed fee, quoted first
We read the articles, any shareholders' agreement and the key correspondence, and give you a written note of your position and options, followed by a call.
Strategy and first letters
Usually within weeks
We agree what you want to end up with, then write to the other side setting out your position, or reply to theirs.
Negotiation and mediation
Where most disputes end
We negotiate the exit, the price or the new arrangements, and propose mediation where it is likely to help.
Court, if needed
Estimate given first
If it cannot be settled, we issue or defend the petition or claim, working with counsel and, where needed, a valuer.
Exit and paperwork
Completion
Share transfers, resignations, releases and Companies House filings, so the settlement actually ends the dispute.
How we charge
- Initial review: a fixed fee, quoted in writing after a short call and before you commit. Fees are plus VAT
- The review covers reading the articles, any shareholders' agreement and the key correspondence, a short written note of your position and options, and a call to go through it
- Negotiation, mediation and court work are not included. We give you a written estimate for each stage before you commit
- Likely disbursements: a share valuer's fees, a mediator's fees and, if it goes to court, court fees and counsel's fees
Who will do the work
Vanessa Challess, Solicitor, qualified 2003, and Director of Bonsai Law. She has spent more than two decades on corporate and commercial litigation, including shareholder, director and partnership disputes, and handles your matter herself.
Where the rules come from
- Companies Act 2006, sections 994 and 996: unfair prejudice petitions, and the court's power to make any order it thinks fit, including the purchase of a member's shares (s.996(2)(e)).
- Companies Act 2006, sections 260 and 261: derivative claims against directors, and the need for the court's permission to continue one.
- Companies Act 2006, sections 168, 169 and 312: removing a director by ordinary resolution, the director's right to respond, and 28 days' special notice.
- Companies Act 2006, sections 171 to 177: directors' general duties, including avoiding conflicts of interest.
- Companies Act 2006, sections 116, 358, 388 and 431: shareholders' rights to inspect the register of members and meeting records and to receive the accounts, and directors' access to the accounting records to carry out their duties.
- Insolvency Act 1986, section 122(1)(g): winding up on the just and equitable ground.
- O'Neill v Phillips [1999] 1 WLR 1092 (HL): in a company run like a partnership, excluding a shareholder without a reasonable offer for their shares will almost always be unfair.
- THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6: no limitation period applies to an unfair prejudice petition.
- Strahan v Wilcock [2006] EWCA Civ 13: shares in a company run like a partnership are normally valued without a minority discount on a buy-out.
Shareholder disputes: common questions
A statutory remedy for a shareholder whose interests have been unfairly harmed by the way the company's affairs are conducted (section 994 of the Companies Act 2006). The court can make any order it thinks fit, and the most common is an order that the other shareholders or the company buy the petitioner's shares (section 996). In a small company run like a partnership, excluding a shareholder from management without a reasonable offer to buy their shares will almost always be unfair (O'Neill v Phillips [1999] 1 WLR 1092).
A director can be removed by ordinary resolution at a meeting, whatever their service agreement says (section 168). Special notice of 28 days is needed (section 312), and the director can put their side to the shareholders (section 169). Removal as a director does not take away your shares, and may not end your employment, so take advice before you react. Removal as a shareholder is much harder, and depends on what the articles and any agreement say.
Look first at the shareholders' agreement and the articles for a deadlock clause, such as mediation, a buy-sell clause or an independent valuation. Without one, the options are a negotiated exit, an unfair prejudice petition or, as a last resort, asking the court to wind the company up on the just and equitable ground (section 122(1)(g) of the Insolvency Act 1986).
A claim brought by a shareholder on behalf of the company, against a director, for negligence, default, breach of duty or breach of trust (section 260). Any money recovered goes to the company, not the shareholder. The court's permission is needed to continue it (section 261).
If there is more than one shareholder, almost always yes. It sets out decision making, exit, valuation, restrictive covenants and what happens on deadlock, death or leaving. Without one, most disputes fall back on the articles and the Companies Act, which rarely give a quick way out.
Every shareholder can inspect the register of members (section 116) and the records of shareholder resolutions and meetings (section 358) free of charge, and can ask for a copy of the last annual accounts and reports (section 431). Directors can also inspect the accounting records (section 388), but only for the purpose of carrying out their duties as a director, not as a way of building a claim of their own. We can advise which route fits your position.
It depends on the documents and on the court. In an unfair prejudice case involving a company run like a partnership, the court usually values the shares as a proportion of the whole company, without a discount for a minority holding (Strahan v Wilcock [2006] EWCA Civ 13), but the facts matter. A valuer is usually needed.
Promptly. The Supreme Court has confirmed that no limitation period applies to an unfair prejudice petition (THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6), but the court can still refuse relief where unjustified delay has caused prejudice, and evidence and money can disappear. Other claims, such as a claim against a director, do have time limits. The court also expects the parties to have tried to settle, including by mediation, before going to court.
Have a question that isn't here? Talk to a lawyer directly - we respond to all enquiries within one working day.
Send an enquiry
Tell us what you need.
A solicitor reads every enquiry and replies personally, usually within one working day. No call centre, no chatbot.
General information about the law in England and Wales, last reviewed 24 October 2026. It is not legal advice and should not be relied on for any particular dispute. Bonsai Law Ltd is incorporated in England (company number 13926937) and authorised and regulated by the Solicitors Regulation Authority (SRA No 8000734). Registered office: The Business Terrace, Maidstone House, King Street, Maidstone, Kent ME15 6JQ. Complaints