Private Equity Minority Investments - Universität St.Gallen

Chapter IV: Voicemechanism constantly fails and the casting vote results in a permanentmajority situation that is incompatible with the principle of good faith, thenaccording to NOBEL, the action for rescission and even the action fordissolution are not excessive demands. 1054 Finally, apart from the simplicityof this deadlock-breaking device, the problem is that the casting vote doesnot solve the conflict between the partners at its core. The losing party isforced into the other’s position without any room for compromise. 1055Hence, this practice can reduce trust between the parties if used consistentlyin either of the parties’ favor and without solving the parties’ centraldispute.Decision by lottery. Instead of assigning a casting vote to the generalmeeting chairperson, deciding to make a decision by lottery could mitigatesome of the concerns mentioned. 1056 Again, however, this device does notsolve the conflict among the opposing parties at its core.Referee. Another method to deal with deadlocked situations is a votingagreement in which the shareholders agree that in case of a deadlock theywill vote in accordance with the instructions of a specified individual suchas a lawyer, an accountant, a conflict mediator, or other specifiedprofessional chosen to rule on the dispute. 1057 To set up this conflictresolution method, alternatively to respective voting agreements, goldenshare 1058 conferring the decisive vote can also be transferred ex ante to thisneutral person, who rules in cases of severe falling outs among theparties. 1059 A potential drawback is that the neutral third person may be seenas being biased or lacking expertise by the parties in conflict. 1060Exit rights. If the conflict between the parties is so profound that commonwill to maintain the business relationship no longer exists among theshareholders, then all that remains is the revision of the shareholder basebased on suitable exit rights and duties. It may be stipulated, for example,that the PEMI dissenting from a defined positive resolution may demandfinds the casting vote critical from a legal standpoint, but justifiably from an economicperspective).1054See NOBEL, Aktienrechtliche Entscheide, p. 250; HOMBURGER, Zürcher Kommentar, CO713, N 325.1055See VON DER CRONE, Pattsituationen, p. 43; HUBER, p. 30.1056See DRUEY, Stimmbindung, p. 31.1057See KRNETA, CO 713, N 803 (qualifying such solution as not very effective but frequentlyapplied); HUBER, p. 60. At the board level, the election of an independent board member isalso a possible solution.1058A Golden Share is a share which enables to outvote all other shares in certain specifiedcircumstances.1059See BRECHBÜHL/EMCH, p. 276; GRONER, p. 373. Critically, NATER, p. 207 et seqq.1060See GRONER, p. 373.175