In the circumstances surrounding the operation of a company, it may be that directors or shareholders take the view that another director is not running the company advantageously or in accordance with their duties, or a shareholder may consider that the company in being run in a way that is unfairly prejudicial to their interest.
Within a partnership relationship, one partner may feel that another is not contributing to the partnership either in terms of time or financial returns.
In the joint venture arena, one company may take the view that another is not performing its obligations under the venture.
Where there are documents in place regulating the relationships, one party may seek to rely on any contractual provisions contained within those documents and the other party will be unable to argue the lack of provisions; although they may say there is no breach. Where there are no documents regulating the relationship, the parties will likely seek to argue an oral agreement or imply matters which have been agreed. This inevitably leads to disagreement.
Whether or not there is a Director’s Service Contract, which will set out the director’s duties, obligations and rights, a director should always act in the best interests of the company, must not compete with the company and must not seek to make a secret profit from the company. In addition to director’s duties which may be included in a company’s incorporation documents, there are also statutory duties set out within the Companies Act. If a director does not act within these bounds then the shareholders/company may seek to remove a director from their position and if the company has suffered loss (for example, because the director has competed and made a secret profit), the company may be able to sue the director to recover the monies.
In the absence of a Partnership Agreement setting out the duties, rights and obligations of the partners, then the partnership is governed by relevant laws. These laws regulate how a partnership will be run, including the expulsion of a partner and the termination of the partnership. If there is a Partnership Agreement, this should contain provisions regulating the partnership and how matters of dispute are to be dealt with. We can advise you as to your options either under any Partnership Agreement or under the terms of the law. If the relationship has not irrevocably broken down we would invite your partner to improve his performance. However, if you feel that the relationship has broken down, or there is no improvement, we would seek to bring the partnership to an end, ideally on agreed terms in the first instance, and only resort to litigation if this was not achievable.
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