When a partner blocks decisions — 3 steps to unblock the management
In February 2024, we worked with a transport company from the Warsaw area, which for 9 months could not buy new cars because two partners had 50% shares each and stopped talking to each other. The company had 340,000 PLN in cash on its account, but the lack of a signature under one resolution blocked fleet development and exposed the company to contractual penalties from contractors. Such a deadlock is not just a legal problem, it's real money that escapes with every day of silence.
Why a 50/50 setup is the most common trap in Polish business
Most small companies in Poland are formed on a foundation of friendship, where sharing shares equally seems most fair. However, statistics from our practice over the last 8 years show that 19% of such companies hit a dead end already at the first serious investment above 50,000 PLN. The problem arises when one partner wants to reinvest profits and the other needs a dividend payout for private purposes. Without a third vote or a clearly defined mechanism in the articles of association, every important operational decision lands in the trash, and the management loses steerability.
At Forum Sovereignty, we see that decision-making paralysis most often concerns key matters: choosing a new office, hiring a CFO, or taking out a working capital loan. In 2023, we conducted 43 cases in which partners could not even agree on the content of the financial report for the National Court Register. Such a situation threatens not only fines but also entry into the register of debtors, which immediately cuts the company off from bank financing and ruins relationships with suppliers who previously trusted the brand.
The worst solution in such a situation is an attempt to forcefully push through a decision without a legal basis. This often ends in court cases, which in Warsaw drag on for an average of 24 to 38 months. During this time, the company usually collapses or loses most of the market to competitors. Therefore, the first step we take is the analysis of facts: how many votes are missing, what are the deadlines in the agreement, and whether there are provisions about the president's deciding vote, which partners often forget after a few years from the visit to the notary.
A management deadlock is not just stress, it's specific financial losses counted in thousands of zlotys every week.
Step one: introducing the 'Texas Shootout' arbitration clause
One of the most effective ways to resolve a deadlock that we use in our clients' agreements is the mechanism colloquially known as 'Texas Shootout'. It consists of one partner proposing to buy out the shares of the other for a specific price, e.g., 156,000 PLN. The other party then has a simple way out: either they accept the offer and sell their shares, or they must buy out the shares of the first partner for exactly the same amount. This forces the quoting of a fair market price and allows cooperation to end within 14 business days.
In June 2024, we applied this mechanism in a small printing house, where a strategy conflict had lasted since November of the previous year. Thanks to a precise provision in the agreement, the process of one partner leaving took only two visits to the notary and cost a fraction of what a case for company dissolution would cost. The most important thing in this procedure is setting short deadlines for a response – we usually give 7 days for a decision, which prevents further tug-of-war and destroying employee team morale.
Introducing such a clause requires courage and clear 50/50 rules. We repair the share structure so that everyone knows that blocking decisions without substantive justification may result in the necessity of buying out the partner or leaving the company. This is a mechanism that disciplines partners to seek a compromise even before the formal launch of the procedure. To be honest, the mere existence of this provision in 83% of cases means that the deadlock doesn't happen at all, because the parties prefer to reach an agreement.
Step two: external mediator with voting rights
If partners want to continue working together but cannot agree on a specific issue, we introduce the institution of an independent mediator or 'arbitration advisor' into the structure. At Forum Sovereignty, we fulfill such a role for 32 regular clients. This involves the parties transferring the dispute to us in case of lack of agreement. We analyze numbers, audit the situation, and issue a recommendation, which in some cooperation models is binding for the management. This allows taking emotions out of the decision-making process and relying on hard data.
Such a mediation process usually takes 3 meetings of 2 hours each. In the last quarter, we helped unblock the marketing budget in an e-commerce company in this way, where a dispute over 87,000 PLN for ads was holding up sales before the peak season. Instead of arguing over logo colors, we focused on the return on investment (ROI) from previous years. The result? The agreement was signed in 4 days, and the relationship between partners significantly improved, because no one felt like a loser – the company's interest won.
Heads-up: Mediation will not work if both sides do not have insight into the same Excel sheets. Often the problem is not bad will, but the lack of access to full information about the state of the cash. That's why, as part of repairing relationships, we often start with organizing the document flow. We set clear rules for access to the bank account and sales reports, which in 47% of cases automatically resolves disputes, because facts stop being subject to guesswork.
Facts matter, not emotions. When numbers are clear, the field for quarrels shrinks drastically.
Step three: changing the company agreement to parity rules
The last but most permanent step is the reconstruction of the articles of association at a notary. We propose the introduction of so-called vote weighting depending on the area. For example: the operational partner has the deciding vote in matters of purchases up to 20,000 PLN, and the financial partner decides on loans and leasing. This allows for sovereignty in their respective areas and eliminates the necessity of asking about every little thing. We implemented such a solution in 2024 in 12 entities, which shortened the decision-making time by an average of 3 business days.
An important element is also a precise definition of 'important reasons' for which a resolution can be blocked. In standard internet agreements, these provisions are so vague that anything can be challenged. We write in specific indicators: e.g., a drop in margin below 12% or an increase in debt by more than 23% quarter on quarter. Thanks to this, the partner knows that they can say 'no' only when they have hard proof for it in a financial report. This restores trust because the rules of the game become predictable for both sides.
The entire agreement amendment process usually takes from 3 to 5 weeks with us, including consultations and preparation of the final notarial deed. We are not the cheapest option on the market – the cost of such structure reworking is usually several thousand zlotys – but it's an investment that pays off at the first avoided conflict. Remember that we repair the share structure not to punish anyone, but so the company can earn money without going to court. The fact matters that after our intervention, 91% of clients declare that their management works more efficiently than ever before.
