Last reviewed 9 September 2026
Disagreements between directors of a private company in England and Wales are common, especially where the directors are also the shareholders and there is no clear separation between ownership, management and day to day pay.
The route to resolution rarely starts in court. It starts with the company's articles of association, any shareholders' agreement, board minutes and service agreements, because those documents set out who can decide what and how a deadlock is broken.
This guide is general information about how these disputes usually unfold and how they are commonly resolved. It is not legal advice, and you should take advice on your own circumstances before acting.
Why director disputes start
Recurring triggers include one director feeling they are carrying the workload, disagreement over strategy or spending, unequal drawings or salary, one director dealing with a competing interest, and a breakdown in trust after a difficult year.
Where the directors are also shareholders, the argument usually spans two hats at once: how the company is managed, and what each person is entitled to as an owner. Separating those two questions early makes the dispute far easier to handle.
Read the constitution before anything else
The articles of association govern board meetings, quorum, the chair's casting vote if any, and how directors are appointed and removed. Many private companies use the model articles unamended and do not realise what that means until a dispute arises.
A shareholders' agreement, where one exists, often adds reserved matters that need unanimous or supermajority consent, a deadlock mechanism, and share transfer provisions covering what happens if someone leaves. Those clauses frequently determine the outcome before any wider legal argument begins.
Directors' duties in the middle of a dispute
Each director continues to owe duties to the company under the Companies Act 2006 throughout the argument, including the duty to promote the success of the company, to exercise independent judgement and reasonable care, to avoid conflicts of interest and to declare interests in proposed transactions.
That matters practically. Locking a fellow director out of the accounting system, withholding board information, paying yourself outside the agreed arrangements or diverting an opportunity are the actions most likely to turn a manageable disagreement into a claim.
Practical routes to resolution
A structured negotiation between the directors, sometimes with an independent chair for one or two meetings, resolves a large share of disputes. Where relations are worse, mediation with a neutral mediator is quicker and cheaper than litigation and can address the commercial deal as well as the legal issues.
Common landing points include a buyout of one party's shares at an agreed or independently valued price, a resignation with an agreed exit package and mutual releases, a revised division of responsibilities recorded in board minutes, or a solvent liquidation and division of assets where the business genuinely cannot continue jointly.
When the formal routes come into play
Removing a director is a shareholder decision made under the Companies Act procedure, and the director concerned has the right to make representations. Removal as a director does not remove the person as a shareholder or end a service contract, and treating those as one step is a frequent and expensive mistake.
Where a shareholder considers the company's affairs are being conducted in a way that unfairly prejudices their interests, the Companies Act provides a petition route, and the most common remedy is an order that the shares be bought out. There is also a derivative claim route for a claim brought on behalf of the company against a director. These are court processes and should not be started without advice.
Protecting the business while you resolve it
Keep the company trading properly: file accounts and confirmation statements on time, keep the statutory registers up to date, hold and minute board meetings even if they are short, and make sure someone reliable retains access to the bank, payroll and key contracts.
Keep a contemporaneous record of decisions and of what has been offered and refused. If the matter later goes to mediation or court, the party that behaved reasonably and documented it is in a much stronger position.
Key points
- Start with the articles and any shareholders' agreement, not with a legal threat.
- Separate the management dispute from the ownership dispute.
- Directors' duties under the Companies Act 2006 continue while the dispute runs.
- Negotiation, an independent chair and mediation resolve most cases.
- Removal as a director does not deal with shares or a service contract.
- Keep filings, minutes and records in order throughout.
Frequently asked questions
- Can one director remove another?
- Not by themselves in most private companies. Removal is normally a shareholder decision under the Companies Act procedure, and the director concerned may make representations. The articles and any shareholders' agreement may add further requirements.
- What is deadlock in a fifty fifty company?
- It is where two equal owners cannot agree and neither can outvote the other. Some shareholders' agreements include a deadlock mechanism such as referral to mediation, an expert determination or a buy and sell provision. Without one, the practical options are negotiation, mediation or a court petition.
- Does a director dispute have to go to court?
- No. Court is the last resort and most disputes settle through negotiation or mediation, often with a share buyout. Court proceedings are slow and costly and rarely improve the commercial outcome.
- Can a director be paid while the dispute continues?
- Payments should continue only in line with what was properly agreed, such as a service agreement or a documented board or shareholder decision. Changing your own pay unilaterally during a dispute is one of the most commonly criticised actions.
- What should I gather before taking advice?
- The articles of association, any shareholders' agreement, recent board minutes, service or employment contracts, the latest accounts and management figures, and a short written chronology of what has happened.