A company is "a contract by which two or more persons agree to put something in common, [...] for the common interest of the parties"1 .
In practice, the common interest of the shareholders appears to be more of a pious hope. Differences of opinion between shareholders are commonplace in business life, sometimes at the risk of the company's survival.
What are the legal solutions available in Monaco to anticipate and respond to these conflicts? This article provides a brief overview of the possibilities offered by Monegasque law.
Anticipate
Whatever the area of disagreement – strategy, operational management, distribution of profits, or the effective participation of shareholders in the running of the company – conflict resolution methods can be anticipated.
When the company is set up, or even afterwards, the shareholders are entitled to agree contractually on crisis exit mechanisms, either in the articles of association or in a partnership agreement.
The articles of association of a Monegasque company define the rights attached to the shares, the quorum and majority rules for decisions and the powers of the directors. They therefore make it possible to limit or strengthen the powers of one or more shareholders.
In Monaco, the articles of association also allow the sale of shares to be subject to the prior approval of the current shareholders or to offer them a right of pre-emption. They thus introduce an a priori control of new entrants in order to protect the common interests of the current shareholders.
The partnership agreement is also a tool for anticipating conflicts. It is a contract, sometimes secret, concluded between some or all the shareholders to govern their relationship. It can be signed at any time during the life of the company and offers a wide range of solutions, including clauses to exclude a shareholder, forcibly buy out shares or even exit clauses.
Act
Legal action offers a number of remedies, in particular to influence the management of the company.
A director may therefore be subject to legal proceedings for removal from office, the conditions of which will depend on the form of the company and its articles of association.
In addition, if a dissatisfied shareholder applies to the court, the judge has the power to appoint an administrateur judiciaire.
The administrateur is ad hoc when appointed to prevent imminent damage or to put an end to a manifestly unlawful disturbance. Their powers are generally limited to a few actions, strictly defined in the court order, such as convening a general meeting.
The administrateur provisoire has more extensive powers as they generally take over from the executive director to manage the day-to-day business of the company, particularly in the event of a disagreement that paralyses the company or puts it in jeopardy.
In any case, Monegasque law alone cannot force a shareholder to sell their shares in the event of a disagreement.
If the shareholders have not anticipated the problem, they will have to negotiate a solution when the conflict arises, again with different strategies possible depending on the situation.
Footnote
1 Articles 1670 and 1671 of the Civil Code
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
