Kuwait Shareholder Disputes
As a shareholder in a company, you can find yourself a party to several types of court actions.
At Arsan we have experience representing shareholders on both sides of a lawsuit.
If there has been a breach of the shareholder agreement, a party to the agreement can sue on the contract and seek damages for her/his loss.
We understand that every case is unique, and we will use our experience to determine which course of action is best suited in a given situation.
The risk for a shareholder dispute is significant, irrespective of your initial relations with the shareholders unless the relationship between the partners is clearly set out and agreed upon.
For businesses with more than one shareholder, we advise shareholder agreements to be executed prior to the business starting off. A shareholder agreement will clearly set out procedures for:
Payment of dividends;
Appointment of directors;
Buy & sell provisions in case of retirement;
Sale of shares;
Issue of new shares
Agreeing on these points at the start of the business venture will decrease the chances that a shareholder dispute will arise later on.
What does a shareholder agreement provide?
A shareholder agreement provides a framework for the shareholders to operate their business while protecting them from undesired consequences.
Most small businesses do not create a formal partnership agreement describing the duties of each partner.
Why do I need a partnership agreement?
A partnership agreement specifies the daily operations, profit sharing, and what happens if one of the partners does not want to continue or dies. It has both how the business starts and how it ends and what are the conditions. Shareholders, quite often in a smaller corporation, get into conflicts regarding their responsibilities, profit-sharing, investment amounts, etc.
Planning for a worst-case scenario at the very beginning of your joint venture will assist you and your partners resolve the issues which might occur in the future or prevent them from happening.
For additional information on Shareholder Disputes, Shareholder and Partnership Agreements in Kuwait, please contact our offices