Partnership Disputes, often referred to as "business divorce," are among the most complex and emotional categories in corporate law. When a business is founded, partners rarely anticipate disagreements, yet as the company grows or faces crises, conflicts of interest become inevitable. This may involve management strategy, financial distribution, or dishonest behavior by one of the partners. Such disputes often lead to corporate deadlock, frozen accounts, and a sharp decline in business value. In Georgia, where the Limited Liability Company (LLC) is the most common business form, partnership disputes are particularly relevant. The involvement of a qualified lawyer is essential to resolve the conflict without dissolving the company, or to facilitate a civilized exit of a partner with fair compensation. Legal.ge offers access to corporate law specialists who will help protect your interests.
What Do Partnership Dispute Services Cover?
The service covers all aspects of internal corporate conflicts, through both litigation and negotiation. Key areas include:
- Resolving Deadlocks: Situations where partners hold 50/50 shares and cannot reach a decision.
- Expulsion of a Partner: Expelling a dishonest partner from the company when there is "good cause" (e.g., causing harm to the company).
- Partner Exit and Compensation: Managing the voluntary exit process of a partner and determining/paying the fair market value of their share.
- Director Liability: Filing a lawsuit against a director (derivative action) claiming compensation for damages caused to the company.
- Dividend Distribution: Disputes over profit distribution when majority partners block dividend payments to minority shareholders.
- Requesting Information: Protecting a partner's right to receive full information about the company's activities and finances.
Real-World Scenarios Where You Need a Lawyer
Imagine you own 40% of an LLC, and your partner owns 60% and is also the director. They start spending company money on personal needs and refuse to issue dividends. You need a lawyer to demand an audit, raise the issue of director liability, and demand a buyout of your share. Another example: two partners hold 50/50 shares and cannot agree on the budget. The company is paralyzed. A lawyer can trigger mediation mechanisms or apply to the court for the expulsion of a partner or liquidation of the company, which often forces parties to negotiate.
Georgian Legal Framework
Partnership disputes are regulated by the "Law of Georgia on Entrepreneurs". The new law (since 2022) details the rights and duties of a partner. The "duty of care and loyalty" is crucial, violation of which provides grounds for a dispute. The law also provides for special lawsuits (derivative actions) where a partner can sue a director on behalf of the company. The company's Charter and Shareholders' Agreement, if one exists, are also of decisive importance. Disputes are heard in common courts unless arbitration is stipulated in the charter.
The Process Step-by-Step
1. Analysis of Corporate Documents: The lawyer studies the charter and shareholders' agreement. 2. Evidence Gathering: Requesting financial documents, bank statements, and meeting minutes. 3. Negotiation: Attempting to reach an agreement on share buyout or division. 4. Filing a Lawsuit: If negotiation fails, a lawsuit is filed in court (e.g., for expulsion or damages). 5. Decision and Enforcement: Forced transfer of shares or imposition of compensation by the court.
Why Choose a Specialist on Legal.ge?
Partnership disputes require deep knowledge not only of law but also of business and finance. Legal.ge allows you to find corporate lawyers experienced in resolving complex internal conflicts. They will help you plan your strategy correctly to minimize financial losses.
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