Corporate disputes
Corporate law is a very broad term and disputes related to it can arise in a variety of situations. As a rule, however, corporate disputes involve disagreements between people who jointly founded a company - and whose views later diverged. Such a situation is unpleasant, since the partners then have to concentrate on each other's legal battles instead of doing business.
In order to continue to devote your time to business, it is often better to leave these unpleasant (and often legally complicated) matters to a lawyer. And what is most often dealt with in such a case?
One of the frequent cases is assessment of the validity of the general meeting. At the general meeting, the shareholders decide on the most important matters of the company. Individual decisions are voted on. And the overrated companion is not always satisfied with the result. In such a case, companion must immediately submit the so-called protest and follow it up with a lawsuit. Everything must be filed within the time limit and carefully reasoned. Preferably with reference to the decision of the Supreme Court, whose decisions guide the lower courts.
Another commonly addressed issue is the so-called Right to information. In fact, the shareholder has the right to request information about the company at the general meeting and outside the meeting, to consult its documents of the company and to check the data contained in the documents submitted. This means, for example,requesting to inspect all contracts for the last period by which the companyhas sold or bought its properties, or contracts that related to a particular value. This is a powerful means for each of the partners to have an adequate overview of the company, even if they do not participate in its daily activities and decision-making. Sometimes a request for information is used as a means of protecting the rights of a shareholder, other times a request for information is abused as a tool of pressure against the company or another (usually majority) shareholder. If the company does not comply with the request, the court again decides. And even here, too, there are a number of decisions where the Supreme Court has considered which information should be released and which should not. This is a good line to know — or at least to estimate, as it is not always completely clear.
In the event that information reaches a shareholder (either by the described request or in another way), it is necessary to assess it - whether everything that has happened or is happening in the company is in accordance with the law. That is, to execute a legal audit. Such an activity is especially important if one of the shareholders suspects that the other shareholder or another person has harmed the company. A typical situation in which this occurs is when the former management of the company leaves (or is dismissed) and the new management finds out in what condition the company was handed over to them.
The investigation described above often results in conclusions that the former management committed illegal acts that caused damage to the company - for which the relevant persons are then liable. This may include the unfavorable sale or purchase of assets, excessive compensation, suspicious transactions without economic sense, and many other variations of asset stripping. Has damage been caused? In what amount? Who exactly is responsible for it? Isn't everything already time-barred? Would it be better to file a lawsuit, or a straight criminal notice? Or pehrhaps both at the same time? All of this (and more) needs to be considered before taking concrete action.
Compensation can also be sought from other persons. Typically, these are members of the supervisory board, if one has been established by the company. This is because the damage may not only be caused by the person who acts for the company (forexample, in the case of an LLC, the managing director), but also by the personwho is supposed to supervise the company. Even neglect of such supervision mayresult in liability for damages.
Membership in the body of a company (and generally any legal entity - including, for example, associations and other non-business legal entities) generally entails a number of obligations. If someone is elected, appointed or otherwise called to such a body, he or she must perform that function with the necessary loyalty as well as with the necessary knowledge and care. It is for each person to assess whether he or she is capable of exercising such care as a good steward once he or she has taken office. If he is not capable of such care, he risks liability for damage caused by his 'inadequacy'.
This is especially true in the case of commercial corporations, typically in a limited liability company. Here, according to the law, one who was in making a business decision in good faith, could reasonably be expected to act with due care and knowledge and in the defensible interests of the corporation. There are, of course, exceptions to this rule as well, and provisions that supplement it.
Damages are far from the only sanction a member of the authority may face. In the event that a member of the statutory body of a business corporation (i.e., for example, an executive) repeatedly or seriously violates his duties, the court may disqualify the member from serving as a member of the statutory body of any corporation for up to three years. In the case of exercising the function of a member of a statutory body despite the established prohibition, such a person is threatened with expulsion from office for up to 10 years. To virtually eliminate him from the business. Quite separate (and very extensive) is the “chapter” of responsibility within criminal law. The Criminal Code knows many crimes that a member of the body can commit. And often very easily.
Even a partner, i.e. the "owner" or "co-owner" of the company, may not be safe. If, by means of its influence in that society, it exerts a decisive influence on its conduct to its detriment, it must compensate for that injury. Again, with exceptions. At the same time, the shareholder is at risk of exclusion from the company due to violation of his obligations. In some cases, he can leave the company unilaterally.
Whatever the dispute is, and however the dispute is related to the operation of a business corporation, the strategy needs to be very well thought out. Disagreements of companions can easily turn into a multitude of intertwined disputes from which only a long and very difficult road can lead. It is therefore necessary to assess one's position and the likely developments at any given moment. That is, to know whether it is better to act or to take offensive action, or to combine the two. That is what a lawyer can best help with.