Shareholder disputes are one of the biggest threats to any business. Internal conflicts can not only disrupt a company's operational activities but also lead to financial paralysis, reputational damage, and ultimately, even company liquidation. Disputes often arise due to dividend distribution, management strategy, violation of minority shareholder rights, or breach of duties by directors. With the development of corporate law in Georgia, dispute resolution mechanisms have also evolved. This includes both litigation and alternative methods such as mediation and arbitration. Specialists on Legal.ge help you manage crisis situations to minimize damage to the business and achieve a fair outcome.
What Does Shareholder Dispute Resolution Service Cover?
Lawyers and mediators on our platform offer a full range of dispute resolution services:
- Negotiation and Mediation: Attempting to reach a consensus at the initial stage of the dispute with the involvement of a neutral mediator, saving time and costs.
- Derivative Suits: Filing a lawsuit against a director on behalf of a shareholder if the director has caused damage to the company (breach of fiduciary duties).
- Expulsion of a Partner: Legal support in the process where one partner's actions harm the company's interests, and their expulsion is necessary based on the Law on Entrepreneurs.
- Exit and Compensation Disputes: Ensuring fair compensation (share value) for a partner wishing to leave the company.
- Deadlock Resolution: Using judicial or contractual mechanisms to restore paralyzed management.
Real-World Scenarios When You Need This Service
Shareholder disputes often arise in the following cases:
- Non-payment of Dividends: When a majority shareholder blocks dividend distribution and diverts funds to increase their own salaries or bonuses.
- Concealing Information: When a director or another partner refuses to provide financial documentation.
- Charter Violations: Making decisions in violation of quorum or procedural rules.
- Misappropriation of Assets: When a partner or director uses company property for personal purposes or transfers it to affiliated persons (Tunneling).
Georgian Legal Framework and Regulations
Dispute resolution is regulated by the Civil Procedure Code of Georgia and the Law on Entrepreneurs. The law provides for special mechanisms, such as the expulsion of a partner for "important reasons" and derivative suits. Also important is the Law of Georgia on Mediation, which makes mediation mandatory for certain disputes before court. It is important to know that a Shareholder Agreement may provide for arbitration, changing the dispute resolution forum. A professional lawyer determines the right strategy and jurisdiction.
Service Process
The dispute resolution process on Legal.ge involves:
- Case Study: The lawyer analyzes the charter, agreements, and factual circumstances to assess prospects.
- Strategy Development: Determining the goal (compensation, share buyout, change of management) and tactics.
- Pre-trial Stage: Sending warning letters and negotiating.
- Representation: Preparing the lawsuit and defending the client's interests in court or arbitration.
Why Choose Legal.ge?
Corporate disputes require not only legal knowledge but also an understanding of business psychology. Specialists on Legal.ge have experience in complex corporate conflicts and are results-oriented. Our goal is to resolve the dispute as quickly and effectively as possible so that the business can continue to function.
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