Corporate conflict – is a dispute between members, shareholders of business, investors, etc., on different issues concerning company management, and often – concerning matters of distribution of dividends or making the most important decisions for the company.
Most frequent origins of corporate conflicts:
- distribution of dividends;
- entering/withdraw of a party;
- creating managing board or director’s appointment;
- transfer of title for company’s shares to other shareholders or third parties;
- separate decisions of the shareholders meeting, etc.
Corporate conflicts should be prevented even prior their appearance by planning, legal risks audit and correct legal arrangement of relations between members, or solve them on an arising basis by negotiation or judicial proceeding.
Solving corporate disputes before they arise
The most productive tool of the private law is a contract, and corporate relations are not an exception. VigoLex team is sure, that correct contract-based relations regulation between members, shareholders and investors helps to evict the possibility of corporate disputes in future.
Tools for regulation of corporate relations:
- for regulation between members and shareholders – shareholders agreement;
- for relations with director and top-managers of the company – employment and non-disclosure agreements;
- for relations with investors – shareholders agreement and subscription agreement regarding investment order and cooperation.
Besides, it is a good practice to develop policies – internal corporate documents of the company that would regulate the main issues of corporate relations in the company, for example:
- access to corporate information;
- company representation in relations with suppliers and government authorities;
- corporate disputes solutions, etc.
It is recommended to make audit of risks that exist in the company during development of such policies, in order that allow considering variants of avoiding or solving possible conflicts, based on existing risks.
Solve corporate disputes as they appear
If corporate dispute has already in progress and poses risks to block the company’s activity, there are two ways of resolving the issue:
Option №1: negotiation. Negotiation should not be considered as just the talk between parties of the conflict. Negotiations for solving the corporate disputes may include negotiations with involvement of representative from both parties, or mediation – involvement of independent expert, who will propose a win-win solution, based on the evidences of parties to the conflict.
Negotiation procedure for resolving corporate conflicts is much more beneficial for parties to the conflict – it is simpler, faster and much cheaper. VigoLex team provides services in the field of negotiated settlement of corporate conflict and is able to help you resolve a conflict situation or act as a mediator for your case.
Option №2: litigation. Resolving corporate conflict in court is most frequent way of solving the conflict between shareholders, members, top-managers of the company, etc. Following corporate disputes may be resolved in terms of judicial proceeding:
- challenging resolution of shareholders meeting;
- challenging sale of shares by shareholder;
- challenging denial of access for shareholder to shareholders meeting;
- resolving articles of association to be invalid;
- challenging validity of deals on behalf of the company, etc.
VigoLex has successful experience in resolving corporate conflicts and is always ready to help business resolve their internal disputes quickly, efficiently and reliably.