Deadlock Definition

GLOSSARY

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What does Deadlock mean?

This is where the parties cannot reach agreement upon a particular matter which requires their approval. A joint venture company in which two shareholders each own 50% of the shares is known as a deadlocked or deadlock joint venture, as the shareholders need to reach agreement on all matters for a decision to be taken. A deadlock may also arise where the joint venture is not held 50/50 in relation to reserved matters which require the approval of all joint venture parties. Joint venture agreements will typically contain deadlock provisions for breaking a deadlock.

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Russian roulette—flowchart

Russian roulette—flowchart The Russian roulette procedure is frequently used to resolve deadlock because, even though drastic, it should be fair as between the shareholders and prevent one shareholder from unfairly manipulating the price payable for the shares. However, it may not be appropriate if there is significant financial disparity between the shareholders as one shareholder may be unable to buy the other shareholder’s shares at the price specified by that other shareholder. The procedure is started by one shareholder (the Server) offering to buy the other shareholder’s (the Recipient’s) shares or to sell its shares to the Recipient at a price per share specified by the Server. In a majority/minority joint venture, the minority shareholder will want either shareholder

Texas shoot out (sealed bids)—flowchart

Texas shoot out (sealed bids)—flowchart The Texas shoot out (sometimes called a Mexican shoot out, Tex Mex shoot out or sealed bids) procedure may be started by either shareholder (or the shareholder which did not cause the deadlock) serving notice on the other shareholder, requiring both shareholders to submit sealed bids for the shares of the other shareholder within a specified timescale. The shareholders will be obliged to complete a share transfer on the terms of the bid with the highest price per share. There are a number of variants to this procedure, including that the joint venture shareholders’ agreement may provide for bidding by auction. It would be more usual in a deadlock or 50:50 joint venture for either shareholder to be able to serve the notice starting the Texas shoot out procedure. In a majority/minority joint venture, the majority shareholder may prefer for only

Private actions and access to information (relating to a regulatory investigation)

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Joint venture shareholders’ agreement—deadlock (50:50)

Joint venture shareholders’ agreement—deadlock (50:50) This Agreement is made on [insert date] 20[insert year] Parties 1 [Insert name of first shareholder] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] ([A]), 2 [Insert name of second shareholder] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] ([B]), and 3 [Insert name of the company in which the shares are held] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] (the Company). BACKGROUND (A) The Company, at the date of this Agreement, has in issue ordinary shares of £[insert nominal value] each, of which one ordinary share has been issued fully paid and is registered in the name of [A] and one ordinary share has been issued fully paid and is registered in the name of [B]. (B) The Company shall carry on business in accordance with the terms and conditions of this Agreement....

Articles of association—joint venture company—corporate real estate—deadlock (50:50)

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GLOSSARY