Deadlock resolution in LLC

Deadlock – a conflict in which the company's activities are under threat: blocking the appointment of a new director, a dispute over the distribution of dividends, disapproval of the transaction, disagreement in strategy, etc.

Ways of resolution:

Determination of the share buyout procedure and voting procedure on deadlocked issues in the shareholder agreement;
Exclusion of the shareholderin court (unlikely);
Withdrawal of a participant (at any time, with receipt of a part of the net asset value and profit increase from the exit before settlement with the exited, in proportion to his share;
Liquidation of the company.

Redemption procedure (1) by foreign practices.

“Russian roulette” - one participant sends to another participant an offer to buy out his share with indication of the price. The other participant is obliged either to buy the share at this price or to sell his share on the same terms.
“Texas shoot-out” - each participant sends to the mediator his offer of purchase price. The highest bidder buys out at that price.
“Dutch auction” - a variant of the Texas shoot-out. The parties determine a minimum selling price. The one who offered a lower price sells.

Such buyout procedure is realized (with nuances of course) through an option (since 19.11.2024 Articles 399-1 and 399-2 of the Civil Code will be effective) or in a corporate agreement.

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