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Shareholders In The News – 14 April 2014

Member: Nifa

The European Commission has just published plans to give the shareholders of publicly quoted companies greater involvement in executive pay policies but what happens in smaller firms when shareholders fall out amongst themselves?

The best option for them would be to engage a firm of forensic accountants, as disputes can arise over matters such as equity valuations, or valuations on royalties or intellectual property, and the only way to resolve these in a fair and equitable manner is through an independent expert.  Typically, it is minority shareholders who most often feel aggrieved and the forensic accountants can investigate the conduct of the company and advise the minority shareholders in respect of possible oppression of the minority and any potential application under Section 459 of the Companies Act 1985.

They would also be able to get to the truth if minority shareholders felt that a business in which they had shares had been sold at an undervalued price or if they felt that a majority shareholder had been given preference.  However, their work in this area is not confined to minority shareholders and  they can equally advise holders of larger shareholdings in a company, who may have other grounds for dispute.

The forensic accountants can also be brought in before a dispute arises, with a view to avoiding one altogether, as they can prepare independent valuations on a business so that all shareholders agree what their share would be before the event.

Author: Roger Isaacs – 14 April 2014

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