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Dr Evil and body modification

By | news

In December 2015 Brendan McCarthy – also known as Dr Evil – was arrested.

 

After a preliminary ruling in the Court of Appeal, on the 12 February 2019, Mr. McCarthy admitted three counts of wounding with intent to cause grievous bodily harm – even though his victims (or “customers” if you wish) had consented to the procedures.

 

You can read the Court of Appeal decision here:

 

https://www.bailii.org/ew/cases/EWCA/Crim/2018/560.htm

 

The charges put to Mr. McCarthy were under Sections 18 of the Offences against the Person Act of 1861 which reads:-

 

…………..wounding with intent to do grievous bodily harm.

 

Whosoever shall unlawfully and maliciously by any means whatsoever wound or cause any grievous bodily harm to any person, . . . with intent, . . .  to do some . . .grievous bodily harm to any person, or with intent to resist or prevent the lawful apprehension or detainer of any person, shall be guilty of felony, and being convicted thereof shall be liable . . . to be kept in penal servitude for life.

 

The charges related to:

 

  1. a Mr Lott who had his left ear removed on the 23 July 2015;
  2. an unknown female had her tongue split with a scalpel on the 23 July 2012;
  3. another victim who had their nipples cut out.

 

All of them signed a consent agreeing to Mr. McCarthy performing the procedure.

 

But crucially, the Act does not mention consent.

 

The leading case in this area is R v Brown 1994 in the House of Lords (now called the Supreme Court).

 

In that case a group of sado-masochistic individuals appealed from their conviction under the act following prosecution for committing acts of violence against each other, including genital torture. The passive partner (or victim) in each case consented to the acts being committed and suffered no permanent injury.

 

Here’s how Lord Templeman responded to the argument that every person has a right to deal with their body as they choose:

 

“I do not consider that this slogan provides a sufficient guide to the policy decision which must now be made. It is an offence for a person to abuse his own body and mind by taking drugs. Where the law is often broken, the criminal law restrains a practice which is regarded as dangerous and injurious to individuals and which if allowed and extended is harmful to society generally.”

 

He also noted:

The victims were youths, some of whom were introduced to sado-masochism before they attained the age of 21. The evidence disclosed that drink and drugs were important to obtain consent and increased enthusiasm.

 

Lord Jauncey added:

 

It was accepted by all the Appellants that a line had to be drawn somewhere between those injuries to which a person could consent to infliction upon himself and those which were so serious that consent was immaterial.

 

Lord Lowry:- …

 

Everyone agrees that consent remains a complete defence to a charge of common assault and nearly everyone agrees that consent of the victim is not a defence to a charge of inflicting really serious personal injury (or “grievous bodily harm”).

 

In the present case, the Court followed R v Brown and observed:

 

What the Defendant undertook for reward in this case was a series of medical procedures performed for no medical reason.

 

and

 

The fact that the desire to have an ear or nipple removed or tongue split is incomprehensible to most, may not be sufficient in itself to raise the question whether those who seek to do so might be in need of a mental health assessment. Yet the first response in almost every other context to those who seek to harm themselves would be to suggest medical assistance. That is not to say that all who seek body modification are suffering from any identifiable mental illness, but it is difficult to avoid the conclusion that some will be, and that within the cohort will be many who are vulnerable.

 

and

 

In short, we can see no good reason why body modification should be placed in a special category of exemption from the general rule that the consent of an individual to injury provides no defence to the person who inflicts that injury if the violence causes actual bodily harm or more serious injury.

 

To my mind where to draw the line is a very difficult question.

 

However, most people of goodwill would think that seriously invasive medical procedures should be regulated to screen out the mentally ill and so that they are only carried out by trained medical practitioners.

 

What do you think?

brexit

Brexit – where are we now?

By | news

At the time of writing, we will leave the EU on the “Exit Day.”

The Exit Day is now 11:00 pm on 12 April 2019.

Given that whatever happens is likely to have an impact on you, I thought it’d be sensible to explain the state of play.

So what options are available to Parliament before April 12th?

  1. Decide to extend the Article 50;
  2. Revoke the Article 50 Notice;
  3. Conclude the Withdrawal Treaty;
  4. Exit without the Withdrawal Treaty.

When the UK leaves the EU, Article 50 states that the EU Treaties will cease to apply to the UK.

 

If the Withdrawal Treaty is concluded it is likely that:

  1. A post exit transition period will run from the Exit Day until the 31 December 2020;
  2. This transition period could be extended for up to 1 or up to 2 years by decision of the joint committee (this joint committee is established by Article 164 of the present Withdrawal Treaty and includes UK and EU representatives);
  3. Most EU law (including amended and supplemental law) will continue to apply to the UK during this period;
  4. The future relationship will be formally negotiated based on the terms set out in the political declaration (an appendix to the Withdrawal Treaty which gives a framework for the future relationship that UK and EU negotiators aim to make before withdrawal);
  5. If an agreement on the future relationship is not agreed at the end of the transition period (or any extension of it) the withdrawal agreement backstop would come into effect.

 

What is the backstop?

The backstop establishes a single UK –EU customs territory, aligning Northern Ireland to EU customs and single market rules, allegedly required to avoid a hard border.

It imposes UK- EU “level playing field” rules regarding such things as competition, taxation, employment standards, etc.

If you think any of these areas are going to affect you, or might affect you, please get in touch and I’ll be happy to give you more information.

non disclosure agreement image

Do we need a new law to regulate NDAs?

By | news

We’re back with another “Behind the news” special, and this one follows in the wake of the Philip Green saga that I emailed you about the other day.

As you’ll probably have seen, there’s something of a bandwagon that a number of MPs have jumped on, claiming we need some new legislation to prevent Non-Disclosure Agreements preventing reports to police.

But, to be frank, these MPs would be better off studying the law a little harder – they’d soon realise that their point makes little sense.

Let’s take a look “Perverting the Course of Justice”:

This is an indictable (serious) offence which carries a serious risk of imprisonment, even on a first time conviction.

Common examples of the perverting the course of justice are:

  • Making false allegations;
  • Fabricating evidence;
  • Concealing evidence;
  • Obstructing the police;
  • Perjury;
  • Interfering with the jury.

You might think that a number of these examples could only be valid in the context of a police investigation, but in the case of R v Rafique in 1993, the Court held that an intention to pervert the course of justice could happen before the criminal conduct was investigated or even discovered.

Concealing evidence is a common example of the offence, and this is often done by the destruction or encryption of hard drives, shredding or burning documents, or hiding things in order to conceal an offence.

What’s this got to do with NDAs?

In the 1973 case of R v Panayiotou (P), the accused had used a third party to offer money to a woman who alleged she had been raped by P.

P made an offer of money for her silence and was convicted of perverting the course of justice for trying to bribe the woman to withdraw the allegation she had made.

It is therefore clear that if you pay money to somebody to withhold details of a criminal offence from the authorities that amounts to perverting the course of justice.

In my experience most of the confidentiality clauses in employment settlement agreements contain an exclusion such as:

 

“The parties agree to keep the terms of this agreement and circumstances concerning the termination of your employment confidential, except where such disclosure is to HMRC, any regulatory or law enforcement body or supervisory authority ….”

 

The police and the CPS are clearly a law enforcement body.

 

A clause such as the above clearly states that disclosure may be made to the police or the CPS.

No solicitor I know would be daft enough to try and insert a clause in an agreement that for the payment of money, the conduct of the employer should be hidden from the police, and indeed, any solicitor including such a clause would fall foul of SRA rules.

And even if an NDA did not contain the words underlined above, can you imagine the Court allowing a claim to proceed if an ex-employee made a complaint to the police?

Imagine a Complainant (C) has been sexually assaulted at work.

They bring a grievance and decide to leave that place of work and a compromise agreement, including a confidentiality clause, is put in place with the Employer (E).

The words underlined above are not included.

After receiving the compensation payment, the Complainant then reports the matter to the police.

E alleges a breach of the compromise agreement by bringing a claim against C in Court.

E tells the court it’s not trying to stifle any or impede any prosecution, it just wants its money back because the agreement has been breached.

If the action is allowed to continue – i.e. it is not struck out for being an abuse of process – then it is very likely the Court is going to hold any contractual clause which purports to prevent reports to the police void – and probably report the employer and its solicitors to the Attorney General for attempting to pervert the course of justice.

In my view, if Sir Phillip Green’s accusers go “public” with their claims (perhaps in circumstances where they feel they can increase the amount of money that they have already received by obtaining payments from newspapers) that would probably be a breach of “NDAs” they had entered into.

However, if they reported the matter to the police, that would not be a breach of an NDA and anyone who brought a claim in Court saying that it was would probably be implicitly confessing to attempting to pervert the course of justice.

What are your thoughts?

John

The name on everyone’s lips: Shamima Begum

By | news

Unless you’ve been living under a rock, you’ll be well aware of the Shamima Begum controversy – we’ll unpick it shortly, but before we dive in, let’s have a brief think about who we are as a country.

(This is only a summary of some very complex areas.)

All of us within the boundaries of the United Kingdom agreed to accept the “Rule of Law” that prevails in the United Kingdom.

For example, we accept:

  1. The sovereignty of parliament to make laws;
  2. The judiciary to make decisions when there is a dispute about those laws;
  3. In certain defined circumstances the state can exercise power by force over our bodies (normally through the police);

If we are not all “singing from the same hymn sheet” chaos reigns, and chaos is usually dominated by the psychopaths and the fanatics.

The “Rule of Law” is therefore not just a legal concept – it is literally part of our makeup, our constitution, our “DNA” – as the common parlance puts it.

 

The Rule of Law is embodied in the law which reflects our shared values.

(Conflicts in our values work themselves out through the democratic process.)

 

Shamima Begum must be treated according to law. Whether we like her or what she has done or not done or what she says is irrelevant.

All of the papers are saying that the Secretary of State cannot deprive someone of their British citizenship if that makes them “stateless”, as this would be a breach of their human rights.

But this isn’t quite right.

We have to look in Section 40 of the British Nationality Act 1981, which you can find here (https://www.legislation.gov.uk/ukpga/1981/61)

Here are the relevant parts, with my emphasis:

 

40 Deprivation of citizenship.

 

(1) In this section a reference to a person’s “citizenship status” is a reference to his status as—

(a) a British citizen,

(b) a British overseas territories citizen,

(c )a British Overseas citizen,

(d) a British National (Overseas),

(e) a British protected person, or

(f) a British subject.

[F117(2)  The Secretary of State may by order deprive a person of a citizenship status if the Secretary of State is satisfied that deprivation is conducive to the public good.]

………………………….

(4) The Secretary of State may not make an order under subsection (2) if he is satisfied that the order would make a person stateless.

[F118(4A)  But that does not prevent the Secretary of State from making an order under subsection (2) to deprive a person of a citizenship status if—

 

  • the citizenship status results from the person’s naturalisation,
  • the Secretary of State is satisfied that the deprivation is conducive to the public good because the person, while having that citizenship status, has conducted him or herself in a manner which is seriously prejudicial to the vital interests of the United Kingdom, any of the Islands, or any British overseas territory, and
  • the Secretary of State has reasonable grounds for believing that the person is able, under the law of a country or territory outside the United Kingdom, to become a national of such a country or territory.]

To my mind the “and” at the end of Section 40 (4A)(b) is conjunctive, which means the Secretary of State can only deprive under Section (b) if (c) applies, i.e. she has a right to acquire Bangladeshi citizenship.

So, she doesn’t have to be a Bangladeshi citizen – she just has to be able to become one.

We will keep following this and bring you the true facts from the court!

brexit

Brexit Made Simple – a Behind the News Article from Cato Solicitors

By | news

Brexit made simple

I know, I know, you’re sick to the back teeth of Brexit, just like the rest of us.
However, I’m willing to bet that there’s a good chance that you’d love to know what’s going on with it all, and why this “backstop” is so controversial, without a politician putting their spin on it to further their own agenda.
And with that in mind, I bring you our next “behind the news” article.
What you probably know is that the United Kingdom has triggered “Article 50”.
And here’s what Article 50 actually is:
  1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
  2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
  3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
  4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
  5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

What does it mean?

In international law the treaty says the EU must negotiate and conclude a withdrawal agreement with the UK which sets “…out the arrangements for its withdrawal, taking account of the framework for its future relationship” (see 50(2) just above).
In other words the agreement must:
  1. Say how withdrawal is going to work;
  2. Give a framework for the UK-EU relationship after withdrawal.
Article 50 allows two years for negotiation and conclusion of the withdrawal agreement.
For the UK this period started on 29 March 2017 when the government gave the European Council a letter notifying the UK’s intention to withdraw from the EU.
What happens if they don’t conclude an agreement within two years?
If the UK and the EU do not conclude a withdrawal agreement by 29 March 2019 (two years after the UK gave the Article 50 letter), the UK will leave the EU without an agreement at 11.00 pm (UK time) on 29 March 2019.
This can only be stopped by:
a)        an Act of Parliament delaying the exit; and
b)       the European Council (acting unanimously) agreeing to extend the two-year period.
The Withdrawal Agreement
This covers many matters but the most important may be:
a)        the Transition period: (Article 126) the duration of the transition period, which will start on the 30 March 2019 and end on 31 December 2020;
b)        during this period for the most part EU law will be “applicable to and in” the UK;
c)        all the benefits (depending on your point of view) of EU membership will continue such as continued participation in the EU customs union and single market;
d)       The “backstop”.
The terms “backstop” means the Northern Ireland “Protocol” contained in the Withdrawal Agreement.
Article 6(1) of the Protocol establishes a single customs territory between the EU and the UK (including Northern Ireland) from the end of the transition period (or any extension of it) until the future UK-EU relationship has been negotiated.
This means that if no final agreement has been agreed between the EU and the UK by the end of the transition period the whole of the UK will enter a “single customs territory” with the EU so there are no tariffs on trade in goods between the UK and the EU.
Northern Ireland will also remain aligned to some extra rules of the EU’s single market which will mean checks on goods entering Northern Ireland from the rest of the UK.
The UK cannot exit the Protocol unless it agrees a final agreement with the EU. The advice of the Attorney General includes:
a)           The withdrawal agreement does not provide for a mechanism that allows the UK lawfully to exit the customs union without a subsequent agreement;
b)           In international law, the agreement would endure indefinitely until a superseding agreement replaced it;
c)           the agreement means the UK cannot compel the EU to conclude a superseding agreement.
d)           This isn’t a conclusive statement, but he does not think Article 50 provides an adequate legal basis in EU law for the agreement to continue beyond 2 years.
If you want to read it go to:
Before the withdrawal agreement that has been negotiated can be ratified:
a)        The House of Commons must pass a resolution approving the withdrawal agreement (see section 13, European Union (Withdrawal) Act 2018 (EUWA);
b)       Parliament must pass an Act of Parliament which contains provision for the implementation of the withdrawal agreement (section 13(1)(d), EUWA).
(If you are interested in reading further you can find the Parliament’s “A User’s Guide to the Meaningful Vote” here:
If the House of Commons does not pass the Resolution (with the vote being delayed there are clearly some major issues) then it must make a written statement setting out how it proposes to proceed, followed by arrangements for motions in both Houses in response to that statement.
(Parliament says:
A motion is a proposal put forward for debate or decision in the House of Commons or House of Lords. A motion must be proposed (moved) before any debate or vote can take place in Parliament.
which isn’t particularly helpful!
In a Board Meeting we would probably call it a “proposal.”)
This proposal was to be put forward by the government. Dominic Grieve MP’s recent amendment means MPs can put forward and vote on amendments to the government’s proposals.
In summary this means, for example, that a majority of MPs could vote to amend the motion to require the government to organise a second referendum.
In a nutshell, that’s where we are now.
What’s going to happen?!

Co-Director Dispute and No Agreement

By | Food for thought, news, Problem Solved

Quite regularly, a company will end up in a situation where directors no longer see eye to eye and reach a level of “deadlock”.

And unfortunately, with lots of companies not having shareholders agreements, it can be difficult to know where to go from there.

Generally speaking, if there’s a deadlock and no shareholders agreement, the best outcome is usually a negotiated settlement which avoids expensive litigation.

Both of the parties can be encouraged by the Solicitors to make a hard and positive effort to come up with pragmatic solutions, perhaps with the help of a mediator through Alternative Dispute Resolution, to avoid ending up in court.

If a settlement cannot be reached there are several options, including winding-up, a buyout by one side or the other, or a solvent liquidation.

Who can help you reach a settlement?

Well firstly, a solicitor…

In my opinion, it’s vital you instruct a solicitor to assist you negotiate a settlement – you need to understand your legal entitlements and alternatives, so you can negotiate from a position of strength.

Also, there are various ways a party’s minority or majority shareholding can be valued and it’s vital to know what your shares are worth before you commence any negotiations.

And secondly, a mediator…

As stated above, employing the services of a mediator is a good alternative to all-out war.

Mediation is a process where a trained mediator, as a third party, tries to knock the parties’ heads together (and sometimes knocks their Solicitors’ head together as well!) to explore a mutual resolution to the dispute.

We can arrange a mediation with a skilled mediator in this area at very short notice, so if you are ever in need, please get in touch.

Mediation often ends up with binding legal agreements, and in our experience, if both parties are competently advised, and know their real weaknesses and strengths, mediation is often successful.

What if all negotiation fails and mediation fares no better?

 You’re then in the realm of litigation:

Your litigation options include:

  1. Claim or injunction for a breach of another Director’s statutory duties;
  2. A derivative action by minority shareholder (see blog post 3 weeks ago);
  3. An unfair prejudice petition (we will deal with this in more detail next week!).

The court has significant discretions in making decisions in all of these areas and it is vital to take competent advice from Solicitors who understand how judges approach these matters before starting.

John

When shareholders cannot agree – Texas Shootout or Russian Roulette?

By | Food for thought, news, Problem Solved

As promised, this week we’re focusing on what happens when there’s an irresolvable deadlock between a company’s shareholders who have an agreement with one of these provisions.

When shareholders simply cannot agree, and the conflict is deemed irresolvable, one of the parties may serve a notice offering to purchase or sell at a specified price.

For example, A and B each hold 50 shares in Comp Ltd. They fall out.

Russian Roulette

A serves notice on B offering to transfer all A’s shares in the company to B at a price specified by A.

B must accept A’s offer and buy A’s shares at the stated price or must sell all his shares to A at the same price per share.

Texas Shootout

Also called a Mexican shoot out. It is a variation of a Russian roulette provision where typically A and B submit sealed bids to an “auctioneer” and the party who makes the higher bid buys the company at that price.

Both Russian Roulette and Texas Shootout only really operate fairly if the parties are of approximately equal financial strength, the shares of the other are affordable, and neither has a unique role in the company.

If Russian Roulette or Texas Shootout are not going to be appropriate mechanisms, a shareholders agreement can also provide for a valuation of the shares and a sale to the remaining shareholder(s), or to the outside world.

But what if A and B don’t have a shareholders agreement? We’ll explore that next week.

Lord Hain – A Speech Too Far. A Cato Solicitors Behind the News Special

By | Criminal, Food for thought, news

If you cast your mind back a couple of weeks, you’ll remember Lord Hain exercising his “parliamentary privilege” to name a businessman who’d been granted an injunction, preventing the Telegraph from publishing a story about him.

And, to be honest, Lord Hain’s words were less like a speech, and more like an elephant blundering about in the rose garden of our constitution.

We give our Judges, not politically appointed Lords, the power to make these decisions.

And, lest we forget, these Judges’ decisions are made not just after hearing all the details of the case argued, but also after many years of study and discipline in law, striving to make fair, legally sound decisions.

Imagine I have told you I am going to publish an article which falsely accuses you of being a thief.

I put it around everywhere that an article about a thief is going to be published soon and many people are looking forward to reading it.

They do not know you are my victim. You go to court to stop me.

At the first Hearing, the Judge decides it is not clear whether what I have written is justified and grants you an injunction until a full decision about the case has been made.

Parliamentary Privileges

Is it fair to you if a Lord or an MP uses Parliamentary Privilege to name you?

There has been no in-depth comment from the media about whether Lord Hain gets away with this playing the supposed “trump card” of “Parliamentary Privilege.” (Who would think the BBC has a ££multi-million news organisation to look into these matters?)

Let’s look at things a little more closely…

“Parliamentary Privilege” is based on the 1688 Bill of Rights which says:

The Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament.

Note it says “ought not”, not “shall not”, so not a complete exemption to say whatever you want.

Is Hain as above the Law as he thinks?

Firstly: contempt of court.

There are many different types of contempt of court. They are sometimes grouped together into the following two main categories:

  1. Contempt by disobedience. For example, disobeying or breaching a court order or judgment, or breaking an undertaking given to the court.
  2. Contempt by interference. For example, disrupting court proceedings or the court process itself (known as “contempt in the face of the court”) and interference with the due administration of justice.

An intentional act in breach of a court injunction by one of the parties to those proceedings who is bound by that order constitutes a civil contempt, which is punishable by the court.

In a case called Attorney General v Times Newspapers Ltd and another in 1992 the Court distinguished that type of breach from a prohibited act by a third party, who may be a stranger to the litigation.

Criminal Contempt

If somebody who is not involved in the proceedings breaches an order they may be acting with criminal contempt because that act constitutes a wilful interference with the administration of justice.

I am not aware of any law which states Parliamentary Privilege definitely gives immunity from criminal contempt.

Secondly: the House’s own Rules.

You can find the relevant Rule here: https://www.parliament.uk/documents/publications-records/House-of-Lords-Publications/Rules-guides-for-business/Companion-to-standing-orders/Companion-to-Standing-Order-2010.pdf

and it says (my emphasis):

The privilege of freedom of speech in Parliament places a corresponding duty on members to use the freedom responsibly. This is the basis of the sub judice rule. Under the rule both Houses abstain from discussing the merits of disputes about to be tried and decided in the courts of law

In this case proceedings were before the court and interfering with its decision to grant an injunction without the permission of Speaker is a breach of the Rules.

Hopefully Hain’s conduct will be referred to the House and the Court that made the order he breached, as a criminal contempt, and to the Attorney General.

We enjoy living under the rule of law – no person should abrogate to themselves the power to make decisions which we have agreed lie with the Judges. Hain’s conduct is not righteous; in reality it tramples on the constitution and thus on our hard-won freedoms and privileges.

What do you think about it all?

John

Shareholder agreements – the often unknown effects

By | Food for thought, news

As my father once told me as I was growing up, “strong fences make good neighbours.” Even if you lived in the house next door to your brother or sister, you would probably want a fence between you to mark the boundary. And in a company context, a shareholder agreement performs much of the same function.

Many boardroom disputes arise from one party or another believing that they are putting more time and effort into the business.

A clear written understanding of what is expected from each director/shareholder, together with an ADR resolution framework, can help to resolve these problems – in other words, a “shareholders agreement”.

Here are just some of the things worth including in your shareholder agreement:

  1. Regulating investment
    Quite often one person puts in more money than another. Failure to agree expectations regarding investment can be fatal to a company’s long-term future.
  2. Pre-emption rights
    A shareholder agreement can provide that shareholders have to offer their shares to each other first and prevent people ending up working with somebody they do not know.
  3. Exit
    Shareholders agreement can clarify the vision everyone has for the company and build a consensus, but also provide for an exit procedure which does not involve litigation lawyers 🙁
  4. Deadlock
    If a majority doesn’t exist – e.g. a company run by two people on a 50-50 basis – then deadlock provision in a shareholder agreement can prevent catastrophe.
  5. Deadlock provisions
    Texas Shootout and Russian Roulette, which we’ll look at next week.

Disagreements and personal differences

By | Food for thought, news, Problem Solved

A good company board is one of the keys to a well-run business, and if it’s doing its job, it should identify key issues that need to be resolved for development to take place, generate a constant flow of ideas and engage in regulated decision making.

That all sounds beautiful, positive and progressive, but as we all know, it doesn’t always turn out that way.

The personal dynamism that the board relies upon can turn into disagreements which, if left to fester, can crystallise into acrimonious disputes.

Pushing disagreements under the carpet

If left underneath the surface these disagreements can undermine the smooth functioning of the board and thus the company’s performance and, ultimately, could threaten the company.

In the infinitely variable play of human conduct, disagreements can arise over strategy, financing of the company and remuneration, conflicts between Directors’ interest in the company and outside interests.

Most of these conflicts are underlined by:-

  1. Lack of a shareholders agreement;
  2. Personal differences.

So, what can you do about these conflicts?

Well, as they say, prevention is better than cure, so it would be my suggestion to work extremely hard to create a culture that minimises the two things that cause most conflicts.

Here are just a few ways to do that:

  1. Clarifying authority, roles and responsibilities;
  2. Establishing regular board meetings with an orderly process;
  3. Meeting outside the business – combining meetings with team activities;
  4. Ensuring the flow of full information to all board members;
  5. The Chairman being wise enough to draw out disputes between parties and drawing the poison (chair needs to be able to encourage Directors to reach a consensus during this process);
  6. Incorporating Alternative Dispute Resolution into the company’s culture.

Our next blog will look at how having a shareholders agreement, although it sounds dull and legalistic, can be an enormous help in preventing and resolving disputes.

John

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