Answer to Question #6536 in Economics of Enterprise for LaMarcus Streeter

Question

Use the Internet to research an instance where a significant dispute has arisen based on a corporate valuation.
Determine what additional steps can be taken in the valuation of a corporation to avoid instances like the one you researched from occurring in the future. Provide specific examples to support your response.

Answer 1

To avoid disputes next steps could be made:
- Rules on how decisions are taken should be included in the company’s articles of
association and/or shareholders’ agreement. The Chairman should refer to these
in situations of potential conflict;
- Each director will have one vote, and decisions will be carried by a simple majority
on a show of hands. The chairman may have the right to exercise a casting vote
if votes in favor of and against a motion are equal; check the articles. It
should also be remembered that on certain issues individual directors may be
prevented from voting by a conflict of interest;
- if there aren't enough directors at a board meeting to take a decision the company's shareholders would then need to call a general meeting to either appoint new directors or amend the
articles;
- etc.