Family Business Disputes

The rights attached to your shares under the articles and any shareholders agreement, and the statutory protections of the Companies Act 2006, of which the most important is the unfair prejudice petition under section 994. In family companies the courts go further, because most are quasi partnerships built on mutual trust: the informal understandings on which the family ran the business, about participation, income and succession, can be enforced even though nobody ever wrote them down. What was actually agreed and assumed over the years is therefore evidence, not just history.

Exclusion from management in a family quasi partnership is the classic foundation for an unfair prejudice petition, and the usual remedy is an order that the others buy your shares at fair value, normally without a minority discount. If you were also removed as an employee or director, those removals generate their own claims, and the strongest strategies deal with the shares, the role and the income together. The earlier the position is established, the stronger the negotiation that usually resolves it.

Yes, and in family disputes it is usually the best route on any measure. Mediation is private, so the dispute never becomes public record; it is quick, usually a single day; and it can produce outcomes a court cannot order, from restructured shareholdings and agreed succession plans to staged exits that let both sides move on. Courts also expect mediation to be attempted and can penalise a party who unreasonably refuses. We prepare family mediations as thoroughly as trials, which is why they settle.

Shares are property, so on death they pass under the will or intestacy, and on divorce they fall within the financial remedy jurisdiction, which can move value or shares outside the family bloodline unless the company's documents prevent it. Well drafted articles and shareholders agreements deal with both events through compulsory transfer provisions and pre emption rights, with valuation mechanics agreed in advance. If your company's documents are silent, updating them is urgent and far cheaper than the dispute that follows the next life event.

You are probably partners under the Partnership Act 1890, and its default rules apply to everything never written down: equal profit shares regardless of contribution, equal say in management, and the right of any partner to dissolve the partnership by notice at any time. Those defaults surprise almost every family they are applied to. Establishing which rules govern you, and then either agreeing terms or using the defaults deliberately, should be the first step in any dispute.

Usually, if it is handled early and the strategy is built around the outcome rather than the argument. Most family disputes end with a restructure or a buyout that lets the business continue: one branch acquires another’s shares, succession is agreed and documented, or an orderly sale realises value for everyone. Winding the company up is a remedy of last resort that courts avoid where a fair buyout is available. Our first question is always what outcome you actually want, because the legal route follows the goal.

We quote fixed fees for every stage, agreed before any work starts, at prices around 30% cheaper than a standard law firm, from the initial review of the company documents and history through to mediation or proceedings. In family disputes the review stage earns its keep twice over, because knowing your position early is what makes the quiet, relationship preserving resolution possible.