Shareholders agreement after a dispute between directors

Directors who own a company together and have fallen out usually find that the dispute was about something the paperwork never dealt with: who decides what, who is paid what, who sees the accounts, and what happens when one of them wants to stop. If they want to carry on, a shareholders' agreement drafted now, with the dispute fresh in everyone's mind, can settle the points the dispute exposed and provide the exit mechanism that would have avoided it. I draft that agreement for the shareholders together, with a briefing session and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days; the service does not include resolving a dispute that has already started, and where interests have diverged I say so and point to separate advice.

Who this is for

Shareholder-directors in England and Wales who have had a falling out, have decided to continue together, and want the terms between them written down so that the next disagreement has a process.

What matters in a shareholders' agreement after a dispute

What the dispute showed was missing

Most disputes between owner-directors are about authority (a director who committed the company without the other's agreement), money (pay, dividends, expenses, a loan), information (one director who did not know what the other was doing), workload (one working harder than the other for the same shares) or exit (one who wanted out and could not get out), and the briefing session for an agreement after a dispute starts by identifying which, because the agreement should settle the point that caused the dispute in terms rather than in generalities; a dispute that is papered over with a standard agreement returns.

Decision making that stops the next one

The agreement should set the reserved matters requiring both or a stated majority (the list the dispute suggests, with borrowing, contracts above a value, hiring, pay and transactions with connected persons usually on it), the matters each director may decide alone within an approved budget, the board's procedure (notice, quorum, minutes, written resolutions), and a deadlock mechanism that both directors have agreed they would use (escalation, mediation, an independent director with a casting vote on defined matters, or a buy-out), with the directors' duties under section 172 of the Companies Act 2006 and the conflicts rules in section 175 restated so that each knows what the other owes the company.

Roles, boundaries and the matters each director may decide

The agreement should record each director's role, authority and reporting, the limits on each (spend, commitments, staff decisions), what each may not do without the other (sign contracts over a value, engage advisers, speak for the company publicly on stated matters), and the time each commits, with service agreements for the employment side and pay set by a process rather than by each director for themselves; a director whose authority is written down has less to argue about than one whose authority is assumed.

Information, money and the end of suspicion

Suspicion is what turns disagreement into dispute, and the agreement should require monthly management accounts to both directors, shared access to the bank and the accounting system, dual authorisation above a limit, an expenses policy, a dividend policy within section 830 of the Companies Act 2006, directors' loans approved as section 197 requires, and an annual review with the accountants at which both directors are present; a director who can see where the money is going does not need to assume.

The exit mechanism agreed while the dispute is fresh

The dispute will have made both directors think about leaving, and the agreement should provide the mechanism they would have wanted: a right to serve notice to be bought out at a stated valuation, pre-emption, good and bad leaver terms, a buy-out on deadlock, and payment terms the business can meet, with compulsory transfer provisions in the articles under section 33 of the Companies Act 2006 so that the mechanism works without litigation; the remedy for unfair prejudice under section 994 remains available, and the agreement is drafted so that neither director needs it.

Acting jointly after a dispute and where separate advice is needed

The agreement is drafted for the shareholders jointly, which is possible where the dispute is over and both want the same thing: a workable relationship with rules; it is not possible where one director is negotiating an exit, where an allegation of wrongdoing is unresolved, or where the terms favour one director in a way the other has not understood, and in those cases I say so and each should take separate advice on the points in issue, with the agreement drafted for the rest. Resolving a dispute that has already started is outside the service, and a dispute that is still live is better addressed by a settlement than by a shareholders' agreement.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

We had a serious falling out but want to carry on. Can one solicitor act for both of us?

For the agreement that governs the company going forward, yes, if the dispute is over and both of you want the same rules. If one of you is negotiating an exit or the terms favour one of you, I say so and point to separate advice on those points.

What should the agreement say about the thing we argued about?

It should settle it in terms: the authority, the pay, the information or the exit that the dispute was about. The briefing session identifies it, and a standard agreement that does not address it is one the dispute will return to.

Is it too late to put in a deadlock clause?

It is not. A deadlock clause agreed after a dispute is usually a better one, because both of you know what the deadlock looked like and which mechanism you would have used.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with deadlock provisions
• Shareholders agreement when a shareholder wants to leave

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.