Corporate ‘‘Deadlock’’ Breaking Mechanisms in Close Corporations

Abstract

The present thesis refers to the deadlocks arising in closely held corporations, which initially cause corporate impasse, a high degree of probability may cause irreparable financial or other kinds of damages, and may ultimately lead to the worst possible consequences for the corporation – dissolution. Through the analysis of the legislation and case law of the USA the author in the first place will try to expound the true essence of deadlocks based on the precedents of significant USA court practices, then will outline the mechanisms for breaking corporate deadlocks, will demonstrate the methods of avoiding corporation stalemates and try to reveal the differences between the true and manufactured deadlocks. The author also will review and critique several decisions made by Supreme court of Georgia in regard to corporate deadlocks in closely-held corporations. The next chapter is devoted to the new “Law on Entrepreneurs of Georgia” adopted by the Parliament of Georgia on August 2, 2021, which enters into force on January 1, 2021 and its relation to international standards, especially USA case law practice. Consequently, the paper represents a problem which pretty nearly has not yet been answered in Georgian legal literature. The present thesis has practical usefulness for practicing lawyers along with any person interested in the topic.