Instructions for resolving internal disputes of joint stock companies

Internal disputes of joint stock companies can seriously affect the operations and sustainable development of the business. Effectively resolving these disputes not only helps maintain good relationships between members but also improves work performance, minimizes risks and protects the company’s reputation. In the article below, we will provide specific information on effective methods of resolving internal company disputes.

Causes of internal disputes of joint stock companies

A joint stock company is an enterprise with the characteristics specified in Article 111 of the Law on Enterprise 2020.

Currently, the causes of internal disputes in joint stock companies often stem from the characteristics of the business and the interests of shareholders. Specifically includes:

• Dividend distribution: Untransparent or unreasonable dividend distribution method and ratio can cause conflicts between shareholders and management.
• Disputes on shareholder status: Issues such as founding shareholders who have not fully contributed capital but claim rights, or abuse of major shareholder status.
• Authority of the Board of Directors: The Board of Directors making decisions without proper authority or violating the rights of shareholders can lead to conflicts.
• Self-interested transactions: Major shareholders or managers abuse their power to make self-serving transactions, causing damage to the company and other shareholders.
• Some other reasons.

Principles for resolving internal disputes of the company

Pursuant to Point h, Clause 2, Article 24 of the Law on Enterprises 2020, the principles for resolving disputes within the company in general and joint stock companies in particular will be based on the company’s charter. This means that the company’s charter will stipulate when an internal dispute arises, what the parties need to do, who will participate in resolving the dispute, when to use the arbitration or arbitration mechanism, etc.

Methods of resolving internal disputes of joint stock companies

When a dispute occurs within a joint stock company, the following effective dispute resolution methods can be chosen:

1. Negotiate to resolve disputes:

• The negotiation method is given priority as the first settlement option. This method may be prescribed by the company’s charter or when the parties agree upon a dispute.
• Negotiation will help the dispute resolution process quickly, economically, and maintain relationships and high efficiency. However, much depends on the goodwill of the disputing parties.

2. Commercial mediation

• Shareholders have the right to agree on a conciliation method to handle disputes according to the provisions of the company’s Charter (Article 6 of Decree 22/2017/ND-CP).
• The mediation agreement needs to be made in writing, ensuring clarity and binding. This means that the settlement agreement must be incorporated into the contract between the parties through a settlement clause, or made into an agreement independent of the main contract, or included in the company’s articles of association.
• In addition, the parties may agree to conciliation before a dispute arises, after a dispute has arisen, or at any time during the dispute resolution process.

3. Resolve disputes through arbitration

According to the provisions of Clause 1, Article 5, Article 16 of the Law on Commercial Arbitration 2010, disputes can only be resolved through arbitration when the parties reach an agreement on this.

Arbitration agreements can be established before or after a dispute arises. The arbitration agreement can be expressed in the contract or a separate agreement, can be an appendix attached to the contract at the time of signing, or signed after the dispute has occurred.

One of the benefits of arbitration:

• Procedures are processed quickly, saving time
• The arbitration award is final and enforceable for the parties
• The trial process is confidential.

4. Resolve disputes through Court

Pursuant to Clause 1, Article 166 of the Law on Enterprise 2020, Point a, Clause 1, Article 30 of the Code of Civil Procedure 2015, disputes between internal members of a joint stock company can be resolved through the Court. This is considered the most severe method and is often chosen as a final dispute resolution option.

Advantages of resolving disputes at Court:

• The Court’s ruling is highly coercive
• Strict procedural order and procedures; and ensure the enforcement of the judgment in Court
• Administrative costs when resolving disputes by court are very reasonable. On the other hand, the parties do not have to pay additional fees to the Judge.

Thus, when a dispute occurs within a joint stock company, the parties can choose to negotiate and conciliate; arbitration or sue the Court for resolution. Depending on each specific dispute case, an appropriate dispute resolution method can be chosen.

Consulting services and support for resolving internal disputes of joint stock companies

At Long Phan, we provide consulting services and support for internal dispute resolution with diverse services to bring optimal solutions to you:

• Evaluate and analyze dispute situations to provide solutions
• Consulting on effective and beneficial dispute resolution methods for customers
• Consulting and supporting the preparation of necessary documents and evidence related to the dispute
• Instructions on the order and procedures for resolving disputes for each specific method
• Representing customers to participate in negotiations, negotiations or work at competent agencies
• Drafting necessary documents during the dispute resolution process
• Consulting and guidance on resolving issues that arise when resolving disputes
• Consulting and planning to carry out tasks after the dispute has been resolved.

Internal disputes of a joint stock company not only affect management stability but can also negatively impact work performance and employee morale. Therefore, having an effective resolution plan is extremely important. We believe that Long Phan’s internal dispute resolution consulting and support services will bring you useful solutions, and efficiency. Please contact us today via the hotline 0906735386 to receive the best support!