Director disputes, boardroom deadlock and director duty claims.
Advisory counsel and independent mediators for company director disputes: removal, exclusion from management, breach of duty, deadlock and shareholder director conflict.
Director disputes usually start long before anyone consults a lawyer. Decisions get taken without a board meeting, one director stops being copied in, remuneration is set unilaterally, and a company that ran on trust starts running on suspicion. By the time counsel is instructed, the question is normally whether the relationship can be rebuilt on new terms or whether one party is leaving and on what basis.
Clerk&Counsel places experienced commercial practitioners on company director disputes for founders, minority shareholder directors, boards, family businesses and investors. Counsel can advise on the merits and the tactics, draft the resolutions, notices and correspondence, and where the matter is suitable a litigation authorised barrister can conduct the claim without a solicitor on the record. Where both sides want to settle, we place an independent mediator instead.
We are a clerking agency and a trading style of Found First Digital Ltd, not a chambers and not a firm of solicitors. Instructions run directly between you and the practitioner you instruct, on a direct access or solicitor instructed basis.
Company director disputes we handle.
- Removal of a director by ordinary resolution under section 168 of the Companies Act 2006.
- Exclusion from management, loss of access to systems, premises and accounting records.
- Boardroom deadlock, casting votes, quorum manipulation and disputed board minutes.
- Breach of directors duties under sections 171 to 177, including conflicts and secret profits.
- Diversion of corporate opportunities, competing businesses and misuse of confidential information.
- Director loan accounts, unlawful dividends and disputed remuneration.
- Derivative claims under Part 11 of the Companies Act 2006 and permission applications.
- Wrongful trading, misfeasance and disqualification exposure where the company is distressed.
Getting the first moves right.
The opening steps in a director dispute frequently decide the outcome. Whether to requisition a general meeting, whether to resign or hold office and force the other side to remove you, whether to seek an injunction to preserve access to records, and how to answer allegations of breach of duty in writing all carry consequences that are difficult to reverse. Advice at that point is cheap relative to the damage done by an instinctive response.
Where a director is also a shareholder, the two positions must be handled together. Resigning as a director may look like a clean break but can undermine an unfair prejudice case built on legitimate expectation of participation in management. Equally, a director who stays in office while trading against the company's interests can create a personal liability that outweighs the value of the shares.
For the company, the priority is usually continuity. Counsel will advise on the resolutions and notices needed to remove or suspend a director validly, the employment consequences, the position on bank mandates and authorised signatories, and how to protect against the removal being characterised later as unfairly prejudicial conduct.
Mediation, buyouts and exits.
Most director disputes end with one party leaving the business. The commercial questions are the value of any shareholding, the treatment of a director loan account, the release of personal guarantees given to banks and landlords, the terms of any restrictive covenants and what will be said to staff, customers and lenders.
None of those can be delivered by a judgment, which is why mediation resolves this category of dispute so effectively. A full day with an independent mediator, position statements exchanged in advance and authority to settle in the room, will usually produce signed heads of terms. The fee is fixed and shared, and it is invariably a fraction of the cost of a contested petition.
Where mediation is refused or fails, counsel can move straight to proceedings. Litigation authorised members of the panel can issue and conduct the claim in the Business and Property Courts, run disclosure and appear at every hearing, which keeps the case in the hands of one practitioner who knows it.
Specialist areas within this practice.
- Shareholder dispute mediation
Confidential mediation for deadlock and buyout disputes.
- Shareholder and partnership disputes barristers
Unfair prejudice petitions and derivative claims.
- Insolvency barristers
Misfeasance, wrongful trading and disqualification.
- Commercial litigation barristers
Business and Property Courts advocacy.
Boardroom dispute that needs resolving?
Send a short outline of the company, the shareholdings and the conduct in issue. A clerk will come back with counsel or mediator options and a fixed fee.
Common questions.
Can a director be removed from the board?
Yes. Section 168 of the Companies Act 2006 allows the members to remove a director by ordinary resolution at a general meeting, on special notice, whatever the articles or the service contract say. Removal from office does not end the employment contract, so a wrongful dismissal claim can follow, and if the director is also a shareholder in a quasi-partnership the removal may itself be unfairly prejudicial conduct.
What is the difference between a director dispute and a shareholder dispute?
A director dispute concerns how the company is managed and the duties owed by directors to the company. A shareholder dispute concerns ownership, value and the rights attaching to shares. In most owner-managed companies the same people wear both hats, so the two run together and the strategy has to address both at once.
What duties do directors owe?
Sections 171 to 177 of the Companies Act 2006 codify the general duties: to act within powers, to promote the success of the company, to exercise independent judgment, to exercise reasonable care skill and diligence, to avoid conflicts of interest, not to accept benefits from third parties, and to declare interests in proposed transactions. Breach is actionable by the company, and by a shareholder with permission through a derivative claim.
What happens when the board is deadlocked?
Check the articles first for a chair's casting vote, a deadlock clause or a shootout provision. If none applies, the practical routes are mediation to agree a buyout or split, a shareholder resolution if one side holds the votes, or, as a last resort, a just and equitable winding up petition. Mediation is almost always cheaper than the alternatives and preserves the trading business.
Can a director be sued personally?
Yes, in defined circumstances. Claims include breach of the statutory duties, misfeasance in an insolvency, wrongful and fraudulent trading, unlawful dividends, and personal liability under guarantees. Directors of companies approaching insolvency should take advice early because the duty shifts towards the interests of creditors.
Do you offer mediation as well as advice?
Yes. We place advisory counsel to act for one side and, separately, independent mediators for parties who want to settle. The two roles are never mixed on the same matter and we confirm the position in writing before any instruction is accepted.