![]() Here are the most common types of situations that can lead to shareholder deadlock: Differences in business strategy What kinds of shareholder disputes can lead to deadlock? Where a company is owned by two shareholders who each hold 50% of the shares, or where there are multiple shareholders with an equal share of decision-making, this can be particularly problematic, especially if there’s also a deadlock at board level. When shareholders can’t reach a decision, then there’s an impasse or ‘deadlock’. Sometimes, you even need a 75% majority or even unanimity. Shareholder decisions are made by voting, and a decision usually needs a majority vote to pass. One such problem is shareholder deadlock. And smart entrepreneurs prepare for every eventuality so that they can get on with making a success of their business knowing there’s a safety net in the case of problems. However, just like in a marriage, differences can occur. It can put a damper on things, and discussing divorce when you’ve only just got engaged can make for an awkward conversation. However, just as with romantic liaisons, partners rarely consider the downsides when committing. And when you’ve co-founders embarking on the adventure it can be doubly so. Starting a business can be an incredibly exciting time. How to put together deadlock provisions in your shareholders’ agreement to deal with disputes.Mediation/arbitration/appointment of an expert.Invite another shareholder or non-executive director to join the company.The dissenting shareholder can sell their shares.Ask a shareholder to leave and buy back their shares.How can you sort out shareholder deadlock if there’s no shareholders’ agreement?.Do I need a shareholders’ agreement to deal with deadlock?. ![]() How can you resolve shareholder deadlock?.What do the Articles of Association say about deadlock?.Withholding of information from shareholders.Differences in contributions to the business.Majority shareholders ignore the wishes of minority owners.What kinds of shareholder disputes can lead to deadlock?.
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