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Jeremy Aldermartin
Jeremy Aldermartin, Solicitor
Category: Law
Satisfied Customers: 8927
Experience:  Dual qualified Solicitor and Attorney
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Question to a solicitor. I am part

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Question to a solicitor. I am part owner/director/shareholder of a small limited company along with 5 other similar owner/directors/shareholders – 6 total. Due to a severe (equal) split within the board the company has become dysfunctional. 3 of the directors opposing me and my 2 other directors have taken a number of actions that are blatantly not in the best interest of the company resulting in the company being unable to trade. Because the vote is split 50/50, the failing directors can not be removed, is there any other action that can be taken within the controls of the 2006 Companies act?

Hi thank you for your message, is the shareholding equally split between the 6 of you and if so is the same division an issue amongst the shareholders so there is stalemate there too?

Customer: replied 1 year ago.
Hi Jeremy, the shareholding is equally split including all aspects on how the company should be managed going forward. There appears to be no compromise and yes has led to a total stalemate.

Hi thank you for your message, the normal route in terms of a stalemate like this would be that all parties agree to appoint an independent arbitrator to determine the correct course of action and be bound by their decision or in the alternative some form of mediation to see if that can lead to a resolution. The Companies Act 2006 provides a statutory procedure to allow the shareholders agreement to remove a director by passing an ordinary resolution (i.e. anything over 50%) at a general meeting of the company so that if it were possible to even get one of the other parties to compromise on removal then a way forward could be achieved and maybe mediation can achieve that. That said, if there is a complete stalemate and the company is not even functioning the final most drastic option but perhaps the most sensible course is that you all agree to dissolve the company and go your separate ways that is assuming that none of the shareholders would sell some of their shareholding to another shareholder so the stalemate would be removed. I hope this helps, if you can please accept my answer and rate me 5 stars (in the top right of your screen) then Just Answer will credit me for helping you today.

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