Harmony between directors and shareholders will deliver growth and maximise the value of the business

In listed companies if the shareholders don’t like what the directors are doing they can simply sell their shares and walk away. For directors and shareholders in limited companies the solution is not so simple. If they come into conflict and there are no safeguards in place, the fallout might paralyse the business.

Conflict can arise for a number of reasons including death, divorce, a disagreement over business direction, or a need to dispose of shares quickly. Although these situations can't be prevented, putting a legal agreement in place when relations are good will set the agenda for how conflict might be managed.

A shareholders agreement will cover off matters such as enabling existing shareholders to have first call shares being sold; how conflict resolution will be handled; or how shares will be fairly valued.

In addition, further examples of safeguards might be:

• good quality and well maintained shareholder records;
• shareholder meetings that meet legal requirements; and
• communicating an interim management statement.

Having worked for a number of organisations, I’ve used various methods to produce favourable outcomes. When working for a large urban regeneration business, I overhauled member engagement, which gave members a real sense of empowerment. That in turn helped the directors engage with the communities they served.

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