The solution is financial, the road there is personal

This is one of the most common situations, and the hardest when nothing was documented. Without vesting and without a transfer obligation there is no automatic mechanism that returns shares on departure or inactivity. What remains is negotiation, and failing that the statutory dispute procedure or inquiry proceedings. We have seen situations where two inactive founders still jointly held two thirds of the shares and the company was completely paralysed by mistrust and deadlocks in the articles. The earlier you act, the more routes remain open.

Because the solution is almost always financial, and the road there is not. The outcome usually consists of writing off loans, giving up shares or accepting dilution. Those are calculations. The reason it still gets hard is that loss is involved. Loss of a role, of an idea about what the company would become, of a friendship. As long as that is not acknowledged, the calculations stay blocked. We deliberately make room for it, because otherwise the process takes longer rather than shorter.

The statutory dispute procedure is aimed at the shares. It allows a shareholder to be bought out, or to exit, at a price determined by the court. Inquiry proceedings are aimed at policy and conduct of affairs. They lead to an investigation, and the Enterprise Chamber can impose interim measures, such as appointing a director or transferring shares into administration. In practice the inquiry is often used to break a deadlock, and the dispute procedure to settle it definitively afterwards.

Sometimes. A conflict about roles and expectations can be resolved with new arrangements on responsibilities, control and compensation, particularly where the business is otherwise healthy. More often the outcome is that someone steps back from day-to-day involvement without immediately leaving as a shareholder. We have structured this with a secondary for part of the shares, accelerated vesting and clear arrangements on remaining involvement. That is usually a better result than a forced buy-out.