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Shareholder Issues- Resolving Board Disputes

Resolving Board Disputes

Directors are primarily responsible for day-to-day decision-making within your company. Where differences arise between them, they have to be dealt with first at Board level, but shareholders may be able to influence the decisions if the Articles permit.

Shareholders' Powers to Resolve Board Disputes

In a joint venture company or where a capital investor is a minority shareholder, the minority may have special protection under the Articles of Association or a shareholders' agreement. This may entitle the minority shareholder to nominate a director for the Board and he in turn may have the right to veto a board decision even though he is in a minority on the Board.

Whilst shareholders in a listed company and other large companies do not expect generally to be concerned with management, the role of shareholders and directors in smaller and owner-managed businesses is unlikely to be so distinct. However, it is equally important that the specific formalities under the Articles of Association are strictly complied with where ratification of a Board decision requiring shareholder approval is necessary.

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