Q&As
What happens if two 50/50 shareholders in a company cannot agree, when there is no shareholders’ agreement in place and the articles of association contain no deadlock provisions?
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Published on: 17 August 2017
There is no simple solution to such a situation. If the parties can reach an agreement for one to buy out the other's shareholding (or find a third party willing to buy from both on acceptable terms), this will cure the problem.
Otherwise, each shareholder can, of course, block any member resolution put forward by the other. On the assumption that the board of directors would be equally deadlocked, nothing can be done without agreement.
Either
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Articles of association definition
What does Articles of association mean?
The principal constitutional document of a company, dealing with management and administration issues, most notably powers of directors, transfer and issue of shares, and board and member meetings. The articles form the fundamental contract between the company and the shareholders and must be available for public inspection at Companies House.
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