Most businesses are established with the view that they will continue for an indefinite period. In businesses where more than one owner is involved, it is not unusual for some disagreement to eventually arise between owners that cause one or more to leave the business.

In the absence of an agreement that sets out rules for how to proceed in the event of a dispute among business owners, they should attempt to amicably resolve any dispute themselves. If this is not possible, dispute resolution methods such as mediation or arbitration may be utilized. Should alternative dispute resolution methods not be suitable or effective, parties may resort to have the matter resolved by the court.

There are various situations where using the courts may become necessary. For example, if shareholders with a minority of the shares believe the corporation is being mismanaged, they can start an action on behalf of the corporation to resolve the issue. Another example would be where the corporation's creditors are not being paid and the creditors submit a bankruptcy application to the Court for an order declaring the corporation bankrupt. If the order is granted, the assets of the corporation are transferred to an appointed Trustee in Bankruptcy to be liquidated and divided amongst outstanding creditors, with the remainder to be distributed to the shareholders.

If you are having a dispute with a business associate, consult one of our experienced corporate lawyers to get advice as to how to best proceed.