MSWG Weekly Newsletter 14 April 2023 (English)

Dispute resolution – boardroom or courtroom

A board is entrusted with the role of ensuring that a company’s business and affairs are managed under its direction and oversight. It is responsible for periodically reviewing and approving the company’s overall strategies and significant policies. At the same time, board members should discharge their powers in a fiduciary capacity and act in the best interest of the company and its shareholders.

However, there are times when dissenting views are overruled by dominant directors/controlling shareholders to the detriment of minority shareholders’ interest.

Shutting down debate in the boardroom does not resolve conflicts. Instead, the conflicts seep through the cracks, destroying relationships from within. Then, the differences in opinion and disagreements escalate into tussles between the boards and shareholder-directors. With rival camps of directors (and sometimes shareholders) jostling for control of the company, drastic actions like removal of directors, filing of legal suits and suspension of directors take place.