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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
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Experience:  English solicitor with over 12 years experience
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Shareholder irreconcilable differences - is there a provision

Customer Question

Shareholder irreconcilable differences - is there a provision in company law?
I am one of 14 shareholders in a Ltd company. The Shareholders Agreement says 10 shareholders are needed to pass a Special Resolution.
On a very important matter, that has a significant bearing on the value of the shares and the ability of the company to operate - there are two opposing camps on the way forward - neither of which has the required 10 majority to pass the required special resolution.
Is there a provision in Company Law on how to resolve this situation - or the ability to apply to apply to the courts to close down the business due to Shareholder irreconcilable differences?
Submitted: 1 year ago.
Category: Law
Expert:  UKSolicitorJA replied 1 year ago.
Hello,
The situation you are facing is quite common and is legally known as a " deadlock".
Yes, there is an option to ask the court to order the winding up of the company on just and equitable grounds under S. 122 (1)(g) of the Insolvency Act 1986, which you may read up on here
http://www.crippslink.com/index.php?option=com_content&view=article&id=510:boardroom-disputes-and-shareholders-disputes-the-underlying-law&catid=17:boardroom-shareholder-disputes&Itemid=514
Hope this helps
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Customer: replied 1 year ago.

Hi - Have already answered one question for me. Note sure how I get you to answer another for another fee - if you have the answer.

I am one of 14 shareholders in a small company. The Unanimous Shareholder Agreement says we need to have a board of 5. Due to terrible relationship in the business and an ageing shareholder community (most over 70) I think only have 1 or 2 will be prepared to be nominated for the board.

So what happens in this situation and can you point me to the appropriate legistation.

Thanks - John Clifford

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