SHAREHOLDER DISPUTES
CD: To what extent are you seeing an increase in the number of shareholder disputes in today’s business world? Could you provide an overview of some of the common sources of conflict?
Sampaio: In Brazil, shareholder disputes have historically focused on day to day issues such as meeting annulments, dividend policies and conflicts arising from shareholders’ agreements. However, with the evolution of corporate governance – and as Brazilian lawyers got savvier on corporate disputes practices worldwide – active minority shareholders have transformed the nature of these disputes. A notable trend is the rise of derivative suits against controlling shareholders and management, even though these tools have been allowed since enactment of the Corporations Law in 1976. Additionally, inspired by US class actions, there has been a surge in shareholder activism seeking compensation for share value declines, often attributed to breaches of management and controllers’ fiduciary duties and abuse of control. These claims increased following high-profile corruption scandals and environmental disasters allegedly led by a breach of executives’ duty of care. Key aspects include whether the company should be blamed for a drop in its own equity value or, rather, is a victim that could be represented by shareholders through a derivative action, as well as the use of multiparty arbitration versus ‘class arbitration’. These disputes are often resolved through confidential arbitration at the Brazilian stock exchange, a requirement for publicly held companies in the highest corporate governance segment.
Nowak: Due to the current business environment in Germany, we have indeed noticed an increasing number of disputes among shareholders. This increase can primarily be attributed to the economic instability impacting businesses’ financial performance. Conflicts then often arise from differing visions among shareholders regarding the company’s strategic direction. Disputes are also caused by perceived imbalances with regard to necessary financial or operational contributions, which may impact the shareholding structure, particularly in the case of restructurings or reorganisations. Besides, changes in regulation and the evolution of corporate governance standards may require changes that lead to disagreements among shareholders. Allegations of breaches of fiduciary duties, such as self-dealing or mismanagement by shareholder-directors, are another frequent cause.
Apr-Jun 2025 issue
Demarest Advogados
Gateley Legal
Hogan Lovells Studio Legale
Latham & Watkins LLC
Norton Rose Fulbright LLP
Quinn Emanuel Urquhart & Sullivan LLP
Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates
Teynier Pic