Correctly handling minority shareholder disputes can be a minefield of egos and eggshells. While not holding all the cards in a business, minority shareholders can be incredibly influential, and even disruptive if a grievance is allowed to develop. 

A minority shareholder dispute can arise from a variety of issues; from being unhappy with their rights within the company, to problems with the way a director is running the business especially if they are appearing to act in their own best interests instead of that of the company  and fellow shareholders. 

Should a minority shareholder issue occur in your business, there are always options to take into account. If unresolved and un-mediated, a small dispute can easily escalate and lead to the courtroom, and the hefty bills that can come with it. 

Find out a few ways you can nip a minority shareholder dispute in the bud before it escalates, and discover how Inquesta can help below.

What are Minority Shareholders?

A minority shareholder describes somebody who holds minority control over a business’s shares, and therefore does not exert influence over said company. In most cases, a majority shareholder is who will have the final executive decisions. This is because they own the majority of the shares, and therefore have control over the board of directors.

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Often, a majority shareholder will have over 50% of the company’s shares, but not always. In some cases a business can be controlled by shares as low as 20%, it all depends on how scattered the remaining shares are and amongst how many minority shareholders. 

While minority shareholders may be powerful people within a company, due to them not having full majority control, they can never be the most powerful person and this can, at times, cause tension. 

No relationship is without its difficulties, and in business butting heads is always possible, particularly when minority shareholders feel disrespected or trodden on in any way. Even family run businesses are known to have heated disputes from time to time.

What Rights do Minority Shareholders Have?

The Companies Act 2006 gave all shareholders, regardless of the size of their stake in the company, rights rising in accordance with the amount of individual shares owned. Said rights are as follows: 

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  • A 5% stake allows a shareholder to apply to court to prevent the conversion of a company from public to private, and call a general meeting.
  • 10% gives the right to call for a poll vote on a potential resolution at a general meeting. 
  • Holding more than 10% allows a shareholder to block a meeting held on short notice.  
  • 25% or more stakes give shareholders the right to prevent the passing of special resolutions.  

It is possible for minority shareholders to have additional rights under a shareholders agreement. These rights can range from vetoing sales, mergers, investments, and more. They will generally be in place when shares are bought, and due to the complexity of the process, would be unlikely to be added after the fact. 

In addition to the above, minority shareholders should be given the right of first refusal to purchase any new shares that may be issued. This will give them  rights to shares on at least the same terms as what any interested outside party would receive.

5 Ways to Resolve Minority Shareholder Disputes 

While the shareholder system is built around those with more shares being afforded extra influence than  others, this doesn’t mean that minority shareholders have no power at all. As shareholders they still have rights that cannot be circumvented, and any perceived attempt to do so could lead to a dispute. 

Failing to resolve a minority shareholder dispute early, can make the issue fester and develop into a much bigger problem, perhaps leading to a costly, time-consuming, and disruptive court battle. 

Learn how best to avoid this from happening, and how it is possible to resolve any issues minority shareholders may have before they develop past reasonable control.

Check any Shareholders Agreements 

The first thing you should always do in the event of a minority shareholder dispute is to check your company’s shareholder documents or agreements. This can give a more clear idea of the specifics around your company’s circumstance; what rights you have, and what right the disputee has. 

It is not uncommon for a shareholders agreement to contain several provisions to assist in case of any dispute. It will act to protect all parties and ensure every situation is totally by the books. 

Call a General Meeting 

Alternatively, a general meeting of shareholders can be called for anybody with at least a five percent stake in the company. It is common practice for a company to use a general meeting as a time for disgruntled shareholders to air their grievance, to have their voice heard and maintain transparency within the process. 

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It is also possible that a resolution can be met that benefits all parties once a minority shareholder has aired their dispute and explained their position. 

Appoint a Non-Executive Director 

Appointing a non-executive director/chairman/board advisor that is not involved in the everyday running of the company can be an excellent way of bringing two parties together. Their distance from the situation should allow for greater clarity, in theory allowing for improved communication and hopefully a speedy resolution.  

Buy Out 

A disputing party may, should they wish, attempt to purchase shares held by other shareholders in order to gain additional powers within the company; or even sell all of their shares to another shareholder or the company themselves. This can act as a way for the party to decrease their responsibility, and to cut their losses, therefore ending any grievance there and then. 

In the case of an internal buyout, all parties will need to come together to agree on a fair value for the shares. In this scenario, a company’s shareholders’ agreement may include a ‘non-embarrassment clause’ with the intention of protecting the seller from any embarrassment and significant financial damage should their former stocks significantly rise in price within a certain time-frame post-sale. 


If all else fails, a common step to take to resolve an issue is through mediation. This usually involves an independent arbitrator to, without bias or prejudice, attempt to find a consensus that will bring the dispute to an end. 

A mediation will usually resolve a scenario through a succession of face to face meetings with all parties present. It may not be the answer 100% of the time, but in most cases, a judge will require such disputes to have first gone through a stage of mediation before it can ever make it to the courtroom. It represents a more cost effective, efficient, less obtrusive, and possibly speedier resolution to what can be a sticky situation.  

How Inquesta can Help Resolve Disputes Between Shareholders

Minority shareholder disputes can often be unavoidable, in the high strung world of business, differences of opinions will develop and they can’t always be dealt with quickly, sometimes they can build and grow. 

In some cases, obtaining expert assistance is the best way to resolve a dispute. But legal help to settle a shareholder dispute can be a lengthy process, coming at great expense and personal stress.

Inquesta offers a cost-effective service that aims to help limit the stress, and speed up the process. Our team is experienced in resolving shareholder issues and acting for both claimants and defendants. 

Years of experience in the industry mean that we are capable of stepping into the fold, assessing the issue, providing an impartial view, and devising a strategy to resolve your  dispute as efficiently as possible.  

To find out more about how Inquesta can help you with resolving a minority shareholder dispute, contact a member of our team today or request a free consultation.