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Join hosts Kevin Hunter and Jeffrey O'Brien as they continue the conversation about Shareholders. This week's episode is about the Deadlock Provision.
A deadlock provision, or deadlock resolution clause, is a contractual clause or series of clauses in a shareholders' agreement or other form of joint ventureagreement which determines how disagreements on key issues are to be resolved in relation to the management of the enterprise.
The main focus of most deadlock provisions are the termination provisions. The principle underlying them is that a successful business enterprise should not be destroyed solely because the two partners are unable to agree on a core issue; the value of the business as a going concern should be preserved, and a fair way should be found to allow one party to bow out with fair recompense for giving up their share in the venture.