Counseling provided to a minority shareholder in a dispute with the CEO/majority shareholder of a joint stock company.
The dispute resolution team of the Firm’s Corporate Law department counselled a minority shareholder throughout the various stages of a dispute which arose between the latter and the CEO/majority shareholder of the company who sought to oust him.
This procedure required application of the following measures:
- threatened court action on the grounds of abuse of a majority shareholder position following the minority shareholder’s refusal of an “accordion effect” arrangement (increase of capital followed by a reduction of capital to settle losses). This arrangement had been planned by the majority shareholder with a view to diluting our client’s share value;
- filing of an action for unfair competition to counter attempts to embezzle share capital to the benefit of another structure formed by the CEO/majority shareholder and close acquaintances ;
- counseling and guidance during the company rescue scheme and liquidation (declaration and admission of the debt corresponding to his shareholder account, opposition to the sale of assets which were clearly insufficient in amount…) ;
- filing of an action against the former CEO to have the latter sentenced to cover the clearly insufficient amount of assets via the Liquidator, and seek remedy for the injury sustained by our client (1M€ uncompensated by the dividends paid during liquidation of the overall debt of 1,5M€ declared and entered in liabilities);
- negotiation of a mutual compromise with the CEO for an aggregate amount of 500.000€ in full settlement of the dispute.
In conclusion, the Firm’s involvement enabled the minority shareholder to quite simply avoid being ousted from the company and via court actions brought against the CEO, obtain compensation equal to two 3rds of the amount claimed, despite the liquidation of the company.