Corporate Disputes and Conflicts

The method of settlement depends on the client's objective and the causes of the disagreement. It is checked whether the parties can continue working together after the governance rules are changed or whether one party's participation needs to end.

• Changing the governance arrangementsIf the conflict concerns the allocation of control or an inability to take decisions, the competence of the management bodies, the voting procedure and the corporate mechanisms for agreeing material matters are revised.
• Buyout of an interest or sharesThe potential acquirer of the interest or shares and the terms of the transaction are determined: the price or the method of determining it, payments and the necessary approvals. Where the company itself acquires the stake, the statutory grounds and restrictions are checked separately.
• Division of the businessIf continued co-ownership is not advisable, the division of companies, assets or individual business lines between the owners is structured. The corporate model for the division and the sequence of steps needed to end joint control are determined.
• Change in the composition of ownersThe conflict may be settled through the entry of a new investor, the sale of the business to a third party or a change in the ownership structure. Such a model is aligned with the parties' existing corporate rights and restrictions.

What matters in a conflict

An owner's position depends on the size of the stake held, the rights under the law and the charter, and the obligations of the parties to the corporate agreement. It is checked which claims can be brought and which restrictions must be taken into account.

• Participation in managementThe right to take part in decision-making, convene meetings, vote and influence the formation of management bodies is analysed.
• Access to informationThe owner's access to corporate documents and other information on the company's activities is assessed.
• Disposal of a stakeRestrictions on the sale of interests or shares, pre-emptive rights, the need to obtain consent and other conditions for a change in the composition of owners are taken into account.
• Contractual rightsThe parties' obligations regarding voting, the disposal of interests or shares and the resolution of deadlocks are analysed. It is checked which arrangements on financing or changes of control have been documented and are enforceable.

Support for the exit of a participant or shareholder

An owner's exit from the business may be an objective in its own right when settling a corporate conflict.

For withdrawal from an LLC, it is checked whether the charter grants that right and what restrictions the law imposes. As a rule, a shareholder cannot withdraw from a JSC by application; a sale of the shares or other mechanisms provided for by law are considered.

Support is provided in negotiations on the price, payments, the transfer of the stake and related obligations. If the business comprises several companies, it is determined whether the group structure needs to be changed at the same time.

Settling a conflict by agreement

Negotiations take into account the client's legal position, the value of the stake, the obligations of the business and the owners' plans, so that the agreed terms can be implemented through specific transactions and corporate resolutions.

The client is represented in negotiations; participation in structuring a solution together with the parties' advisers is also possible.

For settlement before court proceedings, contractual mechanisms are developed that set out new rules for interaction between the owners and the terms for performing the arrangements.

• Keeping the existing ownersIf the parties are prepared to continue working together, the corporate agreement provides for voting obligations and a procedure for agreeing contentious matters. Changes to the structure and competence of the management bodies are made through the charter and the necessary corporate resolutions.
• Option structuresIn settling a conflict, such structures may be used, for example, to provide an agreed scenario for the sale of an interest or shares should a deadlock recur. The conditions for exercising the option, the price or the method of calculating it, the timing and the requirements for the form of the transaction are determined. Granting an option does not in itself change the composition of owners.
• Other contractual mechanismsDepending on the causes of the conflict, agreements are prepared on the performance and discharge of mutual obligations, on financing and on securing performance of the arrangements. Timing, payment terms and the consequences of breach are agreed. These documents are aligned with the corporate agreement and the resolutions of the management bodies so that the owners can implement the agreed method of settlement.

Other remedies and the time limits for using them are assessed at the same time: negotiations do not in themselves suspend the time limits for seeking protection, and the effect of mediation on time limits is assessed separately. If no agreement is reached or it is breached, the available judicial remedies are assessed.

• Settlement optionsA comparison of ways to preserve the joint business, change its governance or end participation.
• Terms of the arrangementsProposals on corporate and commercial terms, and revised drafts following negotiations.
• Settlement documentsDrafts of the corporate agreement, option agreements and other contracts, corporate resolutions and charter amendments for the chosen method of settlement.
• RemediesIdentified grounds for claims, key deadlines and the further strategy if agreement cannot be reached.
• Court proceedingsA statement of claim or response, motions and the client's position in the commercial (arbitrazh) court if the dispute goes to court.

The outcome of the service is the work performed within the scope agreed with the client.