Management board reform in an IT company — parity for an investor from Berlin

The challenge

In June 2024, the situation at CloudNode Solutions became critical. The founders held 67% of shares, but the agreement gave the investor a veto right to every expense above 14,500 PLN. For 12 weeks, the board could not approve any new framework agreement. The investor was afraid that money would be spent on unproven app features, and the Polish team felt their hands were tied in their own company.

Relations deteriorated to the point where the parties only spoke through law firms. The cost of exchanging pleadings alone exceeded 7,800 PLN in one month. The investor threatened not to pay the next funding tranche, which would mean company bankruptcy within 32 days. The atmosphere in the office was thick, and 3 key developers submitted resignations, fearing for job stability.

Our approach

Forum Sovereignty entered the action in mid-August 2024. Instead of analyzing emotions, we focused on a hard division of competencies. We conducted 3 separate sessions with the founders and 2 video conferences with the fund representative in Berlin. Our mediator with 8 years of experience in commercial disputes worked out a list of 7 points of contention that were actually blocking the business.

We introduced a principle of quick decision-making paths. We proposed that the board could independently decide on operational expenses up to the amount of 42,000 PLN, which allowed for normal company operation. In return, the investor received an extended right of insight into financial reports generated every 14 days, instead of the previous quarterly reports.

The solution

We prepared an annex to the company agreement that changed voting rules on parity principles in key areas. We created a system of mutual guarantees: the founders regained control over the recruitment process and equipment purchases up to a limit of 115,000 PLN per year. The investor gained veto rights only in matters changing the capital structure or when selling the company's intellectual property.

Additionally, we implemented a 'quick contact' mechanism. If the investor does not respond to a board request within 48 hours, it is considered accepted. This cut the deliberate dragging out of decisions that previously lasted for weeks. All documentation was signed at a notary in Warsaw on September 18, 2024, which immediately restored liquidity in communication between partners.

Results

Thanks to the new rules, the fund transferred the 2 million PLN tranche 3 days after signing the annex. The company avoided going to court, which saved them about 55,000 PLN in litigation costs and at least 14 months of waiting for a judgment.

Timeline

1. August 2024
   Analysis of decision-making blocks and individual sessions with partners.
2. September 2024
   Joint workshops and working out spending limits.
3. September 2024
   Finalization of the annex and notary visit.