Shareholder Disputes and Challenges to Corporate Resolutions

When the dispute has become legal

There are signals that mark the point where the argument stopped being about business. Meetings are called without proper notice or without quorum; resolutions are passed on items that were not on the agenda; access to the books and financial statements is refused; a capital increase is approved whose only real effect is to dilute one shareholder; contracts are signed between the company and the director's own businesses; or profits are distributed so that one group never receives anything.

In these cases timing matters. Several corporate actions carry short deadlines, and a registered resolution that is not challenged in time produces effects towards third parties that are hard to unwind later. The first thing we check is what is still within time.

Challenging shareholder and board resolutions

Where a resolution was passed without complying with the law or the by-laws, its annulment can be sought. The analysis runs through the minutes, the by-laws and the way the meeting was held:

• Defects in the notice: who called the meeting, how far in advance and by what means.
• Lack of quorum or of the majority required for the matter decided.
• Resolutions on items not included in the agenda, where that was required.
• Minutes that do not reflect what happened, or that are filed with different content.
• Resolutions that disregard rights granted to a shareholder by the by-laws or a shareholders' agreement.
• Applications for interim relief to suspend the effects of the resolution while the merits are decided.

Abuse of voting rights and director liability

Not every majority decision is valid merely because it is a majority. In simplified stock corporations, Law 1258 of 2008 allows resolutions adopted through abuse of voting rights to be challenged, meaning those adopted to harm the company or other shareholders, or to obtain an unjustified advantage. The argument is evidence-driven and requires reconstructing the context of the decision, not just reading the minutes.

In parallel, directors answer for their conduct. We bring corporate liability actions and claims over related-party transactions, competing with the company, use of corporate information or assets for personal benefit, and failures in the handling of financial information. We also defend directors when the claim is against them, which is the same work seen from the other side.

Where the dispute is heard

The Superintendence of Companies exercises judicial powers in several corporate disputes and has become the natural forum for many of them, with the advantage that the authority knows the subject matter. Other matters go to the civil courts, and others to an arbitral tribunal where the by-laws or a shareholders' agreement contain an arbitration clause, which is common and often overlooked. We review the by-laws and any agreements before filing, because bringing a claim before the wrong forum hands the other side months.

Before filing: the information

Many corporate disputes are fought blind because the shareholder does not hold the documents. The right of inspection, on the terms and at the times the law and the by-laws provide, gives access to the company's books and records, and an unjustified refusal is itself something that can be challenged. Before filing we map what information exists, what can be demanded and through which route, so the case is built on documents rather than suspicions.

What the client receives

• A written opinion on the actions available, the deadlines already running and the realistic prospects of each route.
• The information request or exercise of inspection rights, where the case is still being built.
• The claim or defence filed before the competent authority, with interim relief where available.
• Representation at hearings and on appeal.
• Where the dispute settles, the drafting of that settlement and of the by-law or shareholders' agreement changes that stop it recurring.

Much of this litigation originates in by-laws that never provided for a shareholder's exit, for deadlock between two equal blocks, or for how a stake is valued. Once the dispute closes, that is the work that follows, and it is done with our contracts and business advisory practices.