Conflict between partners: how to prevent and resolve it
Disagreements between partners are common and do not always mean the end of the business. With an adequate structure, many conflicts can be prevented or resolved without compromising the company.
Why conflicts arise
Corporate conflicts usually originate in misaligned expectations. Differences over the direction of the business, distribution of profits, withdrawal of partners, division of tasks and level of dedication are among the most frequent causes. In general, the less formalized the rules at the outset, the greater the room for disagreements tends to be in the future.
Prevention begins in the contract
Much of the deadlock can be anticipated in well-constructed corporate documents. Clear clauses tend to reduce gray areas. It is usually helpful to provide for, among other points:
- Rules on resolutions and quorum for relevant decisions
- Criteria for the distribution of profits and withdrawals
- Conditions for the entry and exit of partners
- Mechanisms for valuing quotas in the event of withdrawal
- Ways to resolve deadlocks and any decision-making blockage
The role of the partners' agreement
In addition to the articles of association, the partners' agreement can detail rights and duties, governance policies and rules of coexistence. It is usually a useful instrument for addressing sensitive matters in greater depth, such as non-competition, confidentiality and preference in acquiring quotas. Its suitability depends on the profile and the stage of the company.
Paths to resolve deadlocks
When the conflict already exists, there are different paths, which vary according to the case. Direct negotiation is usually the first step. Methods such as mediation can help preserve the relationship and the business. In more serious situations, it may be necessary to discuss the withdrawal of a partner or the partial dissolution of the company. The choice depends on the degree of deterioration and the parties' objectives.
Frequently asked questions
Is it possible to exclude a partner from the company?
In certain situations, yes, but it depends on the case, the type of company and what the articles of association or the partners' agreement provide. Exclusion usually requires grounds, such as a serious breach of duties, and compliance with an appropriate procedure. It is a sensitive matter that normally warrants a careful analysis of the circumstances.
Is a partners' agreement mandatory?
It is not mandatory, but it is usually advisable. It complements the articles of association and allows the detailing of rules of coexistence, governance and conflict resolution. Companies with a larger number of partners or with differing interests tend to benefit from this instrument, although the need depends on each situation.
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