What happens when a dispute does not involve an external opponent, but arises within the company itself? How can minority shareholders protect themselves when the majority shareholder controls both the General Meeting and the company’s management?
In the third episode of Case Closed, George Psarakis and George Kefalas examine corporate disputes: conflicts between shareholders, business partners and members of the same family that often move from the boardroom to the courtroom.
When the majority shareholder also controls the General Meeting and the Board of Directors, the imbalance of information and power can be decisive. The withholding of dividends, disproportionate directors’ remuneration, transactions with related companies, capital increases that dilute the minority and the diversion of corporate value are only some of the areas in which the most serious disputes arise.
In this episode, we discuss
- What a corporate dispute is and why it arises so frequently in family-owned and closely held companies.
- How abuse of majority power appears in practice: from the diversion of assets and cash to the dilution of minority shareholders through a capital increase.
- When a resolution of the General Meeting may be considered abusive and challenged before the courts.
- What information and special-audit rights minority shareholders have, and the shareholding thresholds required for each remedy.
- How a corporate action may be brought against members of the Board of Directors and when the appointment of a special representative may be sought.
- When a court may appoint interim management under Article 69 of the Greek Civil Code, and why a mere disagreement over business strategy is not enough.
- When directors’ remuneration may be reduced by the court and which factors are taken into account.
- What notable published corporate disputes teach us about the cost, duration and outcome of corporate litigation.
The cases discussed in this vidcast have not been handled by our firm. As we also clarify in the vidcast itself, the information presented is drawn exclusively from reports published in the press.
A corporate dispute is never ‘just legal’. It requires an understanding of the financial data, cooperation between legal counsel and accountants, timely collection of evidence and selection of the right remedy at each stage of the conflict.
The most effective strategy often begins before relations break down: with clear articles of association, appropriate shareholders’ agreements, an understanding of minority rights and early documentation of the relevant conduct. The aim is not a prolonged court battle, but a targeted step that protects both the company and the rights of its shareholders.
