Publication date: 08.06.2024
Legal aspects of corporate conflicts and their resolution
Introduction
Corporate conflicts are an integral part of any company's operations. They arise for a variety of reasons, such as disagreements between shareholders, management, changes in ownership, distribution of profits, and others. Resolving such conflicts requires knowledge of corporate law, effective management and legal mechanisms. In this article, we will analyze the main legal aspects of corporate conflicts in Ukraine, methods of their resolution and opportunities for prevention.
Causes of corporate conflicts
Disagreements between shareholders:
- Differing views on company management, profit distribution, and strategic development directions often cause conflicts between shareholders.
Changes in the ownership structure:
- Buying and selling shares in a company or changing the controlling stake may lead to conflicts between the new and old owners.
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Conflicts between management and shareholders:
- Shareholder dissatisfaction with management's actions, particularly with regard to the distribution of profits, expenses, or strategic decisions, can lead to conflicts.
Failure to fulfill contractual obligations:
- Violations of shareholder agreements, the company's charter or other internal documents may also lead to corporate conflicts.
The main legal mechanisms for resolving corporate conflicts
Mediation:
- Mediation is a voluntary process in which a neutral mediator helps the parties reach an agreement. This method allows you to resolve a conflict quickly and efficiently while maintaining business relationships.
Arbitration:
- Arbitration is an alternative to litigation. Parties can apply to an arbitration court to resolve disputes, which saves time and resources.
Court proceedings:
- If the parties fail to resolve the conflict amicably, they may apply to the commercial court. Litigation is the most formal and time-consuming process, but it provides legal certainty and enforcement.
Use of the company's internal mechanisms:
- The company's internal documents, such as the charter and shareholder agreements, may contain provisions for conflict resolution. These may include internal audit procedures, the establishment of dispute resolution committees, etc.
Preventing corporate conflicts
Clearly define the rights and obligations of shareholders:
- The company's charter and shareholder agreements should contain clear provisions on the rights and obligations of shareholders, decision-making procedures, and profit distribution.
Regularly informing shareholders:
- Transparency in the company's operations and regular informing of shareholders about financial results, strategic plans and other important issues will help avoid misunderstandings and conflicts.
Involvement of independent experts:
- Engaging independent experts to evaluate the company's property, financial condition, and other important issues can reduce the risk of conflicts.
Developing a conflict resolution policy:
- The company should have a developed conflict resolution policy that includes procedures for mediation, arbitration and other dispute resolution methods.
