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Cross-Border Cases
Practice review: breaking a shareholder deadlock in a joint venture
A 50/50 JV that disagrees can be paralyzed without a deadlock-breaking mechanism.
A typical scenario: a cross-border JV with near-equal shareholders disagrees on major matters and, lacking a deadlock-breaking mechanism, its decision-making is paralyzed.
Without a pre-set path, a shareholder deadlock can harm operations long-term or lead to liquidation.
The lesson: pre-set deadlock-breaking mechanisms in the JV agreement (rotating casting vote, buy-sell, third-party determination) and define reserved matters and governance.