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Avoiding Shareholder Disputes
 

Avoiding Shareholder Disputes

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    Avoiding Shareholder Disputes Avoiding Shareholder Disputes Presentation Transcript

    • DISPUTES INSIDE THE TENT:Getting into them, out of them andavoiding them altogether Miranda Lam Litigation Group February 2011McCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 2OVERVIEW¬ Common Forms of Dispute¬ Mechanisms for Dispute Resolution ¬ Mediation ¬ Arbitration ¬ Litigation¬ Avoiding Disputes AltogetherMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 3Common Forms of Dispute¬ The obsessed entrepreneur¬ Family feud ¬ Sibling rivalry ¬ Clinging founding patriarch ¬ Marriage dissolution ¬ Estate planning¬ Three’s a crowd¬ The selfish shareholder¬ Deadlock¬ Complaints by directors or creditorsMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 4Suggested Mechanisms for DisputeResolution ¬ Mediation ¬ Arbitration ¬ LitigationMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 5Mechanisms for Dispute Resolution¬ Alternative Dispute Resolution ¬ Mediation ¬ Process by which two or more parties to a dispute attempt to resolve the dispute by reaching an agreement amongst themselves by utilizing the services of a mediatorMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 6Mechanisms for Dispute Resolution(contd)¬ Alternative Dispute Resolution (contd) ¬ Arbitration ¬ Process of resolving disputes between two or more parties whereby a third party (an arbitrator) hears or reviews evidence and renders a binding decision based on the parties’ legal rights. ¬ The arbitrator may be a single person or a panel of three whose appointment is agreed to by the parties or pursuant to the rules of arbitration that the parties have chosen. ¬ Process is consensual and consent cannot be withdrawn once the process is commenced.McCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 7Mechanisms for Dispute Resolution(contd)¬ Litigation ¬ A claim is commenced by an aggrieved party in the court against another ¬ The dispute is resolved by a judge ¬ Process is governed by civil litigation rulesMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 8Advantages of Alternative DisputeResolution¬ Expediency¬ Expertise¬ Control¬ Relationship preservation¬ Confidentiality¬ Cost effectiveMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 9Challenges with Alternative DisputeResolution¬ Lack of certainty¬ Difficulties with enforcement¬ Appeals¬ Planning and foresightMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 10Litigation Process¬ Advantages ¬ Certainty ¬ Enforceability ¬ Availability of options for recourse and relief ¬ Public¬ Challenges ¬ Inefficient ¬ Not cost-effective ¬ Relationships challenged ¬ PublicMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 11Committing to a Dispute ResolutionProcess before a Dispute Arises¬ Mechanism embodied in agreement¬ Considerations relating to arbitration ¬ Agreement to arbitrate ¬ Choice of forum or place of arbitration ¬ Use of a neutral administrative service provider ¬ Choice of law ¬ The appointment of an arbitrator ¬ LanguageMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 12Committing to a Dispute ResolutionProcess before a Dispute Arises¬ Considerations relating to arbitration (continued) ¬ Arbitral Process ¬ Ad hoc v. institutional rules of procedure ¬ Ad hoc ¬ Specific, tailor-made for certain situations ¬ Negotiated beforehand ¬ Institutional ¬ Defined body of rules ¬ Some judicial interpretation ¬ Available to suit most situations ¬ Which process is for you? ¬ Choice of counsel?McCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • 13Avoiding Disputes Altogether¬ Do not make him or her a partner or a shareholder¬ Maintain good corporate governance¬ Enter into a considered shareholders’ agreement ¬ Commit to a dispute resolution mechanism ¬ Record shareholders’ expectations ¬ The nature of the business ¬ Commitments to each other as shareholders and/or employees ¬ Operational issues ¬ Exit mechanismMcCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549
    • VANCOUVER MONTRÉALSuite 1300, 777 Dunsmuir Street Suite 2500P.O. Box 10424, Pacific Centre 1000 De La Gauchetière Street WestVancouver BC V7Y 1K2 Montréal QC H3B 0A2Tel: 604-643-7100 Tel: 514-397-4100Fax: 604-643-7900 Fax: 514-875-6246Toll-Free: 1-877-244-7711 Toll-Free: 1-877-244-7711CALGARY QUÉBECSuite 3300, 421 7th Avenue SW Le Complexe St-AmableCalgary AB T2P 4K9 1150, rue de Claire-Fontaine, 7e étageTel: 403-260-3500 Québec QC G1R 5G4Fax: 403-260-3501 Tel: 418-521-3000Toll-Free: 1-877-244-7711 Fax: 418-521-3099 Toll-Free: 1-877-244-7711TORONTOBox 48, Suite 5300 UNITED KINGDOM & EUROPEToronto Dominion Bank Tower 125 Old Broad Street, 26th FloorToronto ON M5K 1E6 London EC2N 1ARTel: 416-362-1812 UNITED KINGDOMFax: 416-868-0673 Tel: +44 (0)20 7489 5700Toll-Free: 1-877-244-7711 Fax: +44 (0)20 7489 5777OTTAWASuite 200, 440 Laurier Avenue WestOttawa ON K1R 7X6Tel: 613-238-2000Fax: 613-563-9386Toll-Free: 1-877-244-7711McCarthy Tétrault LLP / mccarthy.ca / February 2011 / Docs #10053549