Director and Shareholder Disputes: What 12 Years of Commercial Litigation Reveals
Boss Lawyers has spent the last twelve years acting in commercial disputes across Queensland and interstate —
particularly director disputes, shareholder disputes and partnership disputes.
Over that time, one thing has become very clear:
most business disputes are not caused by bad people — they are caused by bad structures.
This article isn’t about celebrating an anniversary. It’s about sharing what repeatedly goes wrong, why it goes wrong,
and what sophisticated business owners do differently to avoid expensive outcomes.
1. Informal shareholder arrangements last… until they don’t
Many disputes start with phrases like:
- “We never got around to formalising it”
- “We trusted each other”
- “We always agreed we’d sort it out later”
Informal shareholder and partnership arrangements often work when businesses are small and aligned.
They tend to fail when money starts flowing, control becomes valuable, or one party wants out and the other doesn’t.
When the arrangement is undocumented, courts are left reconstructing intention from emails, conduct and incomplete records —
an expensive and uncertain exercise.
Well-drafted agreements don’t create disputes. They contain them.
2. Control, governance and director disputes
Many business owners assume shareholding percentages reflect control. They don’t.
Disputes commonly arise where voting rights don’t align with equity, board powers are unclear, directors assume authority
they don’t legally have, or minority protections exist on paper but are unenforceable in practice.
By the time control becomes contentious, it is usually because something has already gone wrong — underperformance,
mistrust, or a proposed exit.
Sophisticated operators address control early, not defensively.
3. Exit provisions and shareholder dispute risk
Few businesses plan properly for deadlock, incapacity, loss of trust, or a fundamental divergence in strategy.
When exits are undocumented or poorly drafted, parties are forced into valuation disputes, urgent injunctions,
oppressive conduct claims, or forced liquidations that benefit no one.
The irony is that clear exit mechanisms often prevent exits from being triggered at all —
because leverage and consequences are known in advance.
4. Governance failures compound quickly
Another consistent theme is the belief that governance is a “big company” problem.
In reality, small and mid-sized businesses are often more vulnerable because directors wear multiple hats,
related-party transactions are informal, financial reporting is delayed or incomplete, and decisions are made without records.
When disputes arise, governance failures don’t just weaken legal positions — they can create personal exposure for directors.
5. Prevention is cheaper than litigation
By the time a dispute reaches litigation, commercial relationships are usually irreparable, positions are entrenched,
legal spend escalates rapidly, and outcomes are uncertain even for well-advised parties.
In contrast, early legal structuring and periodic review preserves optionality, reduces leverage imbalances,
and significantly lowers long-term risk.
A final observation
Twelve years of dispute work leads to a simple conclusion:
Businesses rarely fail because the law is unclear — they fail because risk wasn’t addressed while it was still manageable.
The role of experienced advisers is not just to fight disputes well, but to design structures that make disputes less likely,
less damaging, and easier to resolve.
Need advice on a director or shareholder dispute?
If you’re dealing with governance tension, deadlock, or an exit issue, early advice usually improves the outcome.
Read more about our work in director disputes and shareholder disputes.
