A dispute between business owners can quickly affect bank access, contracts, employees, company assets and the ability to make valid decisions. Before threatening removal, freezing accounts or filing litigation, the first task is to identify the company’s legal form, the constitutional documents, ownership percentages, management authority and the exact decision or conduct being challenged.
1. Identify the legal form of the business
The analysis differs depending on whether the business is:
- A sole establishment.
- A partnership.
- An S.A.R.L.
- An S.A.L.
- A holding or offshore company.
- A foreign-company branch.
- Another regulated structure.
The Lebanese Commercial Register distinguishes personal companies from capital companies and provides the official record of registered commercial companies and amendments.
2. Obtain the current corporate record
Review:
- Commercial Register extract.
- Articles of association or bylaws.
- Amendments.
- Ownership/shareholding information.
- Managers or directors.
- Authorized signatories.
- Registered office.
- Capital changes.
- Registered resolutions where applicable.
- Any dissolution, liquidation or other status change.
Do not build a strategy from an old company file if the register has changed.
3. Read the articles and any shareholder agreement
The constitutional documents normally govern key corporate mechanics.
A separate shareholders’ agreement can regulate additional commercial rights between shareholders, subject to mandatory law and the company’s constitutional structure.
Official Lebanese investment guidance notes that shareholders’ agreements are used to address governance, board composition, minority rights, reserved matters, dividends, transfers, defaults and exit mechanisms.
4. Define the real dispute
Common disputes include:
- One partner excluding another from information.
- Disputed authority of a manager or director.
- Unauthorized use of company funds.
- Related-party transactions.
- Refusal to distribute agreed profits.
- Disagreement over capital contributions.
- Transfer of shares or quotas.
- Deadlock.
- Competition with the company.
- Removal of management.
- Validity of resolutions.
- Control of bank accounts.
- Access to books and records.
- Dissolution or liquidation.
- Breach of shareholder or partner agreements.
Different disputes require different remedies.
5. Separate company assets from personal assets
One of the most common mistakes is treating the company as though it were simply the shareholders.
The legal entity, shareholders and managers can have separate rights and liabilities.
When company money is allegedly misused, identify:
- Whose money it legally is.
- Who authorized the payment.
- The legal authority for the transaction.
- Who benefited.
- Whether the transaction was recorded.
- Whether approval was required.
- Whether the conduct creates civil, commercial, corporate or potentially criminal issues.
6. Preserve company records
Important evidence may include:
- Commercial Register records.
- Articles/bylaws.
- Shareholder agreement.
- Board or partner minutes.
- General-assembly minutes.
- Bank records.
- Accounting records.
- Invoices.
- Emails and WhatsApp.
- Company devices or access logs.
- Contracts with related parties.
- Share-transfer documents.
- Management authorizations.
Avoid removing or destroying company records while ownership and access rights are disputed.
7. Authority and signing power
A frequent question is whether one manager, chairman, director or partner had authority to bind the company.
The answer can depend on:
- Company form.
- Registered management.
- Articles/bylaws.
- Board or partner resolutions.
- Commercial Register information.
- Specific powers of attorney.
- Restrictions that are internally valid or opposable to third parties.
This should be checked before alleging that a contract or payment is unauthorized.
8. Deadlock
A 50/50 or closely divided company can become unable to function.
The review should identify:
- Voting rules.
- Reserved matters.
- Quorum.
- Casting-vote provisions.
- Management authority.
- Transfer or buyout mechanisms.
- Exit clauses.
- Dissolution rights.
- Whether negotiation or interim protection can preserve the business.
Litigation may be necessary, but it can also destroy value if a workable exit is possible.
9. Transfers of shares or quotas
A proposed sale or transfer can trigger:
- Pre-emption rights.
- Consent requirements.
- Transfer restrictions.
- Valuation issues.
- Tag/drag rights under an agreement.
- Registration formalities.
- Disputes over beneficial ownership.
The rules vary by company form and documents.
10. Urgent situations
Urgent legal review may be needed where there is:
- Movement of company assets.
- Unauthorized bank instructions.
- Destruction of records.
- Attempted transfer of ownership.
- Irregular general assembly.
- Misuse of confidential information.
- Immediate exclusion from management.
- Threatened disposal of key assets.
Any requested interim measure must be tied to the legal right and the specific risk.
11. Consider the company’s interests, not only the owners’ positions
A shareholder dispute can harm employees, contracts and enterprise value.
Possible strategies can include:
- Information and document access.
- Formal objection.
- Corporate meeting procedures.
- Negotiated governance changes.
- Buyout or exit.
- Enforcement of shareholder obligations.
- Court proceedings.
- Urgent relief.
- Dissolution or liquidation where legally appropriate.
12. Cross-border ownership
Foreign shareholders, offshore assets, international contracts or owners living abroad can add:
- Service issues.
- Power-of-attorney requirements.
- Applicable-law questions.
- Cross-border evidence.
- Recognition and enforcement.
- Foreign tax or regulatory coordination.
Practical first review
Prepare:
- Commercial Register extract.
- Articles/bylaws.
- Any shareholder agreement.
- Ownership percentages.
- Management and signing authority.
- Relevant minutes.
- Bank/accounting records.
- Key correspondence.
- Chronology.
- The decision or transaction disputed.
- The outcome sought.
Frequently asked questions
Can one shareholder remove another?
Ownership and management are different. Removal from management does not necessarily remove ownership. The company form, bylaws, agreement and applicable law must be reviewed.
Can I stop another partner from using company money?
Potentially, where there is a legal basis and evidence of unauthorized conduct, but the correct remedy depends on authority, urgency and the ownership of the funds.
Do shareholders have a right to company information?
Information rights depend on company form, status and applicable rules. The corporate documents and legal framework should be reviewed before demanding or withholding information.
Can a shareholders’ agreement override the bylaws?
Not automatically. It can regulate rights among the parties, but it must remain consistent with mandatory law and its effect on the company or third parties may differ from purely contractual obligations.
What if the company cannot function because the owners are deadlocked?
The options may include governance mechanisms, negotiated exit, share transfer, court intervention or, in some cases, dissolution. The least value-destructive route should be assessed first.
Conclusion
A shareholder dispute should be approached as both a legal conflict and a business-continuity problem. The first step is to establish the corporate facts from the current register, constitutional documents, agreements and financial records before choosing the remedy.
General information only. This article does not constitute legal advice and does not create an attorney-client relationship.