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Shareholder Disputes

The shareholders of a corporation are its final decision makers. Although they invariably delegate much of the management and operational duties to directors and officers, the shareholders must approve regulations put forward by directors. Shareholders meet in quorums and usually receive an itemized list of issues to be discussed ahead of time.

Shareholders have a unique voting power in that the amount of voting shares that they control dictates the amount of votes they have to weigh in. There is thus a divide between majority and minority shareholders.

Shareholders are usually governed by a unanimous shareholders agreement, which typically contains a dispute resolution clause. This clause usually sets out that any disputes are to be decided by an arbitrator rather than a court. The courts pay high deference to unanimous shareholder agreements, in particular the dispute resolution clauses that keep many disputes out of the courtroom. However, minority shareholders might not be given the right to be heard by an arbitrator, in which case the courts will hear an action for an oppression remedy or another appropriate wrong.