c) Vanilla Put and/or Call Options: As part of a “betting option,” a shareholder is required to sell its shares to the other shareholder, while a shareholder is required, as part of a “call option,” to purchase the shares of the other shareholder. As a general rule, one or both such options are made available to the applicant party at a predetermined fair market price/value, with no possibility of making a counter-offer to the receiving party. In an unequal joint venture, “Put Option” can be beneficial to a minority shareholder, while “Call Option” can be beneficial to a majority shareholder. A stalemate could occur in a large number of scenarios, for example. B if agreement can`t be reached on a given issue after two management meetings or if a budget cannot be approved within a specified time frame. Regardless of the method used as a deadlock-break mechanism in a shareholder pact, it is important to define the deadlock situations that trigger the procedure. This is a Dutch auction in which shareholders make sealed bids indicating the minimum price at which they would sell their shares. The shareholder with the highest price must buy the shares of others at the lowest price. Of course, the cost of not solving the problem could be high, even if the shareholder remained.

However, if there are serious differences of opinion, there are other ways to get out of the business or to solve the problem. B for example the use of drag along clauses. If the situation is so dire that the value of the company will fall to this point, it is likely that shareholders will take further action sooner. However, the risk of abuse associated with these clauses should not be underestimated, which can happen, particularly among economically unbalanced partners. Other risks can at least be reduced by appropriate contracting. The diversity and opportunities offered by shoot-out clauses allow shareholders to find tailored solutions in the event of a conflict, but it is advisable to offer proactive and professional advice in the area of corporate law. Since, in the end, launch clauses often result in an unintended result, at least for one of the parties, the corresponding clauses must be legally secure and drafted without escape routes, so that they do not miss the mark afterwards. There are many methods that can be used to solve a Deadlock, which means that no deadlock clause is the same. This clause is similar to the one mentioned above, but it has the additional component of an independent mediator who facilitates and controls the meeting, with the aim of reaching an amicable compromise. Unlike the compromise clause, the Ombudsman does not have the power to impose a solution or make a decision. Shareholders share the cost of the mediator.

A well-considered shareholder pact will include deadlock mechanisms (also known as deadlock provisions or deadlock settlement clauses) to facilitate a quick solution. Such termination clauses are also used in the practice of the German contract, but their effectiveness has long been controversial. The Bundesgerichtshof`s case law (judgment of 19 September 2005 – II ZR 173/04) has consistently ruled in favour of invalidating termination clauses that were to exclude a shareholder from the company, even without objective reason. Deadlocks don`t just happen in 50:50 joint ventures. Companies in which shareholders hold disproportionate stakes or executive seats often establish agreements in their shareholders in which a majority or unanimous agreement at the shareholder and/or board level is required as a form of minority protection. If agreement cannot be reached on such reservations, it is a dead end. Often, the development of the deadlock provisions will depend to a large extent on what the parties want to reach consensus. This clause authorizes one or more shareholders to “provide” shares for other shareholders.

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