Dispute type
Shareholder Disputes Insurance
Risk transfer that may be arranged around the cost and capital profile of shareholder disputes.
- A judgment or award won
- A judgment against you
- Funder capital deployedConsidered
- Law firm fees and WIP
- Security for costsConsidered
- The opponent's costsConsidered
- DisbursementsConsidered
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
Can shareholder disputes be insured?
Shareholder and joint-venture disputes can be insured for costs risk, typically through ATE covering the other side's costs through to a valuation hearing or trial. Funding with capital protection is an option where the petitioner cannot carry its own costs.
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Key points
- Valuation evidence often dominates the later stages.
- Security for costs is common where the petitioner is overseas.
- Settlement dynamics are personal, which underwriters weigh.
The risk profile
Unfair prejudice petitions, derivative claims and joint-venture disputes can be costly, personal and hard to settle.
Valuation evidence often dominates the later stages.
Which structures apply
- ATE for adverse costs
- Funding with capital protection
- Security for costs cover where the petitioner is overseas or has limited assets
Illustrative scenario
A minority shareholder seeks a buyout of a £15m stake. The petitioner insures adverse costs through to the valuation hearing, with limits staged around disclosure and expert evidence.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Underwriting considerations
The conduct complained of, the valuation methodology, the relationship between the parties and the realistic remedy.
Frequently asked
Can a minority shareholder insure an unfair prejudice claim?
ATE can cover the adverse costs risk; underwriters will focus on the conduct complained of and the realistic remedy.
Is funding available for shareholder disputes?
Sometimes, particularly where a buyout at fair value would produce a substantial recovery.
Who pays the costs in an unfair prejudice petition?
The court has discretion, but costs generally follow the event, so the losing party can face a substantial adverse costs order.
Can a company insure against a shareholder claim?
A company or its directors may consider adverse judgment or contingent risk cover, subject to underwriting on the specific claim.
Is security for costs common in shareholder disputes?
It can be, particularly where the petitioner is based abroad or has limited assets within the jurisdiction.
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.