Dealing with disputes within a corporation
Disagreements can happen in any corporation. Disputes may arise between individual directors, members, the board and members, employees or advisory committees. If disputes are not managed well, they can affect decision-making, relationships and the corporation's ability to operate effectively.
Directors play an important role in helping to address disputes fairly, respectfully and in accordance with the corporation's rule book.
Common causes of disputes
Disputes may arise because of:
- misunderstandings or poor communication
- disagreements about decisions
- uncertainty about roles and responsibilities
- concerns about finances or governance
- conflicts of interest
- disagreements between members or directors
- concerns about elections or meetings
Understanding the cause of the dispute can help identify the best way to resolve it.
Act early
Disputes are often easier to resolve when they are addressed early.
Avoiding difficult conversations or allowing tensions to build can make a dispute harder to resolve.
Directors should encourage respectful discussion and try to identify issues before they escalate.
Follow the rule book
Every corporation must have a dispute resolution process in its rule book, and they must use it to resolve disputes.
Before taking action, directors should:
- review the corporation's rule book
- understand the dispute resolution process that applies
- ensure the process is followed fairly and consistently.
Focus on the issues
When resolving a dispute:
- listen to all sides
- focus on the facts
- treat everyone respectfully
- keep discussions professional
- look for practical solutions.
The aim should be to resolve the issue, not to assign blame.
Keep records
The corporation should keep records of:
- concerns raised
- discussions held
- decisions made
- actions taken to address the dispute.
Good records can help if the dispute continues or needs to be reviewed later.