If you operate your landscaping business as a sole trader then you are in a position whereby you have no other directors or shareholders with whom you must discuss and agree on business decisions.
However, if you are part of a landscaping company, especially if it has several directors or shareholders, then you will be aware that an agreement is necessary for important decisions.
Whilst most landscaping companies operate year in and year out without much dissent between their directors, it can come to pass that a serious disagreement occurs.
Given that a disagreement can be on a hugely important matter about the running of the landscaping company, they can cause a significant dispute between those directors.
Disputes between directors can occur for other reasons which include:
- A director not being given access to company documents, records, and accounts
- One or more directors not fulfilling, or worse, breaching their duties and obligations
- A complete breakdown of the relationship between one or more directors
The question then arises, how can a dispute between directors of a landscaping company be resolved?
Further, what are the options for resolving such a dispute and in particular what can be done if a director is also a shareholder and thus owns part of the company?
Here are some of the possibilities including those that can be followed if a resolution is not possible.
Negotiation
Although it might seem obvious, the first thing that should be done is to try and negotiate a resolution between directors.
Often, the dispute occurs simply due to a lack of communication or a misunderstanding and therefore speaking to each other for clarification and to reach a satisfactory resolution often works.
Mediation
This can be tried as a first step, or after negotiations have failed to reach a resolution.
Here, a third-party mediator joins the discussions and tries to arbitrate between the directors who have a dispute.
Legal advice may also be sought at this stage to clarify some of the legal points.
Resignation
It could be that a director of a landscaping company if they feel that they can no longer continue as a director due to a dispute with other directors that cannot be resolved, decides to resign as a director of that company.
However, the caveat will be any stipulations or obligations which sit within the constitution of the landscaping company and the director’s agreement.
Shareholder Agreements
Where the directors of a landscaping company are also its shareholders, the prudent thing to do at the outset is to have a shareholders agreement.
In this there will be a process that must be followed should a dispute arise between the directors aka shareholders arise.
This could itself be the catalyst for a dispute whereby a shareholder breaches the agreement with actions such as buying shares in a competitor company, starting a rival landscaping company, or worse, stealing intellectual property or funds from the company.
Selling/Splitting The Company
In instances where the directors are also shareholders and no resolution to the dispute can be found, it could be that they all agree to either sell the company in its entirety or split the company.
Options include selling the company to a third party, closing the business and splitting the assets, or one shareholder buying shares from other shareholders who subsequently leave the business.
Go To Court
If no resolution to a dispute can be found, and none of the options previously listed are acceptable to any director or shareholder, then the decision may be taken by one or more of them to take the matter before a court.
Exactly what decision the court will be asked to make will depend on the specifics of the dispute. All directors and shareholders should seek legal advice and representation.