Ongoing partner and shareholder disputes can be extremely damaging for a business and its future. Once positions become entrenched, it can be difficult for the opposing parties to find common ground and come to a mutual agreement amongst themselves. It is therefore essential to seek independent and professional advice at the earliest possible opportunity.
The key to many disagreements is often the value attributed to the firm and the individual parties’ interest in the business. Forensic accounting is therefore a great solution for resolving shareholder disputes as it involves a meticulous investigation into the company’s standings and finances.
How a Dispute Between Shareholders can Arise
There are several reasons why a dispute between shareholders can arise. One such example is if a minority shareholder believes they are being unfairly treated when it comes to how the company is being managed, or in relation to how their share dividends are being paid out.
Another potential cause for a dispute between shareholders is when a party who acts as both a shareholder and director either retires from or leaves the firm to pursue other interests. Disagreements can often arise over the terms on which they depart and, more commonly, the value of their shares. Even in cases where a shareholders’ agreement should theoretically give guidance on how a valuation should be applied, there may be conflicting opinions on how the specific clauses should be interpreted.
Perhaps the most common reason for a dispute between shareholders relates to the fiduciary responsibilities that they hold. For example, one party may conduct a transaction that breaches prior agreements without informing the rest of the team. A forensic accountant’s ability to gather and interpret important details could settle the issue without resorting to litigation.
How Forensic Accounting can help with Resolving Shareholder Disputes
There are several ways in which forensic accountants can help with resolving shareholder disputes. These include:
- Quantifying damages relating to breach of contract, fiduciary responsibility, misappropriation of funds etc
- Assessing predatory pricing loss
- Determining of damages relating to defective products
- Identifying and collecting relevant information needed for investigations to take place
- Rebutting reports from opposing expert witnesses
- Appearing as expert witnesses to offer testimony under cross examination
A forensic accountant will focus on collecting, analysing and consolidating information that will prove useful in either a court case or for non-litigation purposes. This evaluation can involve anything from a review of the firm’s financial statements to audits of tangible and liquid assets. Forensic accounting can also assist with interpreting income reporting or conducting a profit and loss report.
As previously mentioned, one of the most common ways in which forensic accounting can help with resolving shareholder disputes is when it comes to breaches of the fiduciary responsibilities that each party must uphold. Misspending funds for personal enrichment or personal expenses is not only a violation of the terms of a partnership agreement, but also a violation of the law.
In many cases, when there is wrongdoing relating to a company’s financial affairs, all partners or shareholders can become liable for the consequences. It is therefore necessary to ensure you are protecting not only your firm’s interests, but your personal ones as well. A forensic accountant can help you do just that.
Knowing exactly what is going on with your company’s money is vital to protecting yourself and ensuring the longevity and success of the business. Unfortunately, when a shareholder dispute arises, it can be extremely difficult to get a clear picture of exactly what has happened and where money has been distributed.
Situations like these are ideal reasons why you should enlist the help of a forensic accountant. They will trace any transfers of cash that have taken place and determine whether or not your company’s books are accurate. Forensic accountants will also meticulously comb through financial statements and accounting records to identify irregularities and inconsistencies that are a sign of wrongdoing, while also working to identify those responsible.
A forensic accountant can be appointed at almost any time during a shareholder dispute. Due to their knowledge and expertise, they are able to act as an expert witness during the litigation process and answer questions under cross-examination – thereby significantly strengthening your position.
Working with a forensic accountant earlier on in the process, however, gives you a great chance of resolving shareholder disputes before litigation needs to take place. This could potentially save a lot of time and money going forward.
That being said, no two cases are ever the same. In some circumstances, it may not make sense to involve a forensic accountant. Thankfully, the vast majority of specialist companies will provide a free initial consultation to determine whether or not it is necessary to secure their services.
How Inquesta can Help with Resolving Shareholder Disputes
If you need help with resolving shareholder disputes, you can rely on Inquesta to assist. We understand that issuing or defending any kind of commercial dispute can be incredibly stressful. This is why we work tirelessly to reduce the pressure on you and your company, while also endeavouring to achieve the best possible result for you.
We are adept at helping with all sorts of commercial disputes, including:
- Contractual disputes
- Compulsory purchase orders
- Transactional disputes
- Professional negligence
At Inquesta, our clients are our number one priority. This is why we offer a no obligation consultation service to determine whether or not it would be beneficial for you to instruct a forensic accountant. If we believe we are able to help, we will then work with you to achieve the best possible result at the lowest cost to you.
Our expert forensic accounting team will leave no stone unturned when it comes to our investigations. We are even able to tailor our services to suit your individual circumstances, so you can be confident you are working with a company that has your best interests at heart.
To find out more about how Inquesta can help you with resolving shareholder disputes, contact a member of our team today or request a free consultation.