Ways of eliminating deadlock as a kind of corporate conflicts.

Abstract

The article deals with the study of deadlock as a form of a corporate conflict. It proves that the methods of preventing and eliminating this type of corporate conflicts in the science of corporate law have not been studied precisely. The issues of the legislation’s development and tendencies of the development of the court practice in the sphere of corporate disputes solving have been identified as follows.

It is argued that, depending on the specifics of the differences and the presence of the founders (participants) desire to pursue to administer affairs, one of the ways to eliminate the deadlock should be chosen: 1) exclusion of the participant from the company; 2) liquidation of the entity; 3) compulsory redemption of a share under the supervision of a court under the conditions specified in the corporate agreement.

According to the results of the research, have been drawn up the proposals aimed at the effective prevention and resolving of such corporate conflicts as deadlock, namely: 1) Supplement to the LLC and ALC Act with the new Article 24¹ "Grounds for exclusion of a participant from the company", including in it an exhaustive list of grounds, under which it is possible to exclude a participant from the company, namely: a) systematic or gross violation of the founder (participant) of his duties; b) if the participant's actions embarrass the company’s running; c) in case of fault in the actions of such participant, which were resulted in the termination of the company. Exclusion of a company member, whose share in the authorized capital is 50 percent, is possible only in exceptional cases, with the court evaluating the circumstances of the case, determining the degree of fault of each of the participants, checks the arguments of the parties. By itself, an equal distribution of shares cannot be a ground for refusing a claim; 2) the supplement to the norm of point 1 of part 1 of Article 110 of the Civil Code of Ukraine as a distinctive feature for the application of liquidation by the court decision, which can be defined as a significant complication in the company’s activities. Such a condition of a company may be considered as a condition when: a) the members of the company evoid participation in its activities, which leads to the inability of making decisions due to the absence of a quorum; b) because of long-term corporate conflict, significant abuse was committed by all members of the company; 3) introduction of the share redemption mechanism by one participant from another under the supervision of a court in case of a corporate deadlock in the state legislation.

The article was justified not just expedience of the deadlock elimination, but prevention of the occurrence of corporate deadlock by applying such a preventive measure as making of the corporate agreement, which aims to balance the interests of all its parties and to reduce directly the possibility of conflict situations in a corporate enterprise