Board and management disputes can be very expensive for any business and at times can threaten their very survival.
This is especially so, where there is a deadlock in making key decisions — most made by way of majority vote. A deadlock can occur where there is a tie between two opposing views.
Usually, the Companies Act, as well as the articles of association of the company, have provisions on decision making.
In some companies, the chairman has a casting vote in the event there is a tie. While in other firms such as in some joint venture companies, a deadlock can lead to ownership and managerial changes.
In other joint venture companies, where there is a prolonged deadlock, then the majority shareholder may acquire the stake of the minority.
Many firms lack dispute resolution policies at board and management levels, yet these rows can affect the performance and survival of a company.
A lot of memorandum and articles of association today provide that dispute resolution shall be by way of arbitration.
Arbitration definitely has its advantages over the court process in that, it is faster despite the fact that at times it may cost more than the court process. In today’s column, I want to advocate the use of mediation as a dispute resolution strategy at board and management levels.
While mediation may not be binding, I believe it is a quick intervention when the company is facing a boardroom battle.
Mediation can be used to help prevent a dispute from escalating as well as solve it. In Kenya’s corporate scene, a number of leading companies have found themselves in a dire situation due to a boardroom war.
There is a lot of litigation on this with some of the orders being sought include injunctions, freezing company assets and so on.
There are some companies that have not been able to survive a boardroom war and have had to close.
I have dealt with a case where directors of the company could not agree on very simple matters and they took the option of voluntary winding up and liquidation of the business. With hindsight, I believe mediation would have saved the firm.
Therefore, it is advisable to craft in mediation clauses in the constituting documents and even have in place a dispute resolution mechanism where mediation is resorted to in certain events.
When the directors are not able to come to an amicable solution, there is no harm in getting help from a qualified mediator who will come in to assist in conflict mediation.
There are a lot of certified mediators with this expertise.
The solution crafted will be a win for the company and not just for the directors. Mediation will assist in resolving personality clashes within the board, disgruntlement and so on.
I believe this is one of the best dispute resolution tools t board level, as the best interest of the company is truly upheld using this method not considering who is right or wrong.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
