Conflict resolutions between shareholders and management executives

Shareholders of integrated companies may face disagreements and fights several times, which may threaten the stability of the company. Therefore, it is very important to be aware of the different options of prevention and conflict resolution between shareholders.

The drafting of shareholder agreements and other social agreements play a fundamental role as measures of prevention and solution to conflicts between shareholders.

Agreements between partners to avoid conflicts

Partnership agreements are pacts signed between the shareholders of the company in order to regulate the internal relations that govern the company. These agreements establish several aspects related to the operation of the company, and are intended to prevent and avoid possible conflicts between shareholders.

Some of these agreements may be parts of the exact statues of the company, while others derive from rigid commercial rules that should be articulated as additional statutory agreements.

The efficiency of agreements on third parties

Agreements with efficiency on third parties may be included in the Statute of the Company. These agreements are subject to registration and are only effective against third parties in good faith after their publication in the official Commercial Registry.

For example, these agreements regulate the legal regime of the acquisition of shares and the regime of operation of all bodies of the company.

Agreements with contractual effectiveness

This type of extra-statutory agreement is limited to the contracting parties and arises for two reasons:

  • The legal impossibility of inscribing them to the Commercial Registry
  • The desire of the partners not to give them publicity.

These include the following:

  • Those that regulate the consolidation of shares for the purpose of voting

This is the case of unifying votes, either for all the subjects that can be treated in the general meeting, or for only some subjects of them. Several types of them exist:

  • Union of command: when the grouping is done in order to maintain the control of the company
  • Union of defence: when the grouping is done to defend the interests of minority shareholders against the majority in control
  • Union of blockade: when the grouping aims to establish limitations for the transfer of shares or participations between the signatories of the agreement.
  • Those that regulate the acquisition price of the shareholdings

In case of the removal of a partner, and a lack of agreement regarding the fair value of the shareholdings and shares, these shares will be valued by an independent expert nominated by the mercantile registrar of the resident company.

  • Establishment of “drag along” or “tag along” clauses

These clauses are established in the event of the sale of the company.

Extrajudicial methods of conflict resolution

Extrajudicial dispute resolution methods are very effective tools in resolving conflicts between shareholders. They present the following advantages:

  • Reduction of costs compared to judicial proceedings
  • Reduction of conflict resolution times
  • They are particularly suitable in certain types of conflicts in which the parties seek confidentiality
  • In extrajudicial dispute resolution, especially mediation systems, the parties themselves are parties to an agreement and there is no need for a third party
  • Mediation in particular is very beneficial when the relations between the parties are continuous, for instance in the cases of family disputes or disputes among neighbours, partners or companies when the relations between them are mostly permanent.

This article is not considered as legal advice

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