Conflict

Transactions

Governance

Wealth

Corporate finance

Tensions? Diverse perspectives? A lack of information or trust? With a long history in advocacy, we possess the necessary experience to resolve conflicts between shareholders or board members.

Resolve your conflict?

Deminor NXT manages transactions in an orderly manner thanks to the combined legal and financial expertise of an experienced M&A team. Whether the subject covers an acquisition, a transition, a family transition, an exit, a capital increase or even another form of financing, we always strive for an objective valuation, where value maximisation and solid agreements serve as the foundation.

A transaction in mind?

Corporate governance underpins what we believe in: choosing the right structure for your company in which transparent communication prevails and roles are respected in order to work together in trust.

Need guidance?

What is next? We listen to your questions or needs around your personal wealth and guide you through the next steps. As your companion down the road , we provide you with a tailor-made structure.

Discuss the next step?

Whether it concerns a valuation of your shares or your company, cash flow planning or financial analysis, at deminor NXT we make sure your numbers add up. We transform your strategic vision into a comprehensive financial business plan and help you with your investment decisions.

Determine your approach?

< back

Participate without being overruled: taking control of your position as a minority shareholder

deminor NXT > News > TRANSACTIONS – Participate without being overruled

Written by

Introduction

Holding a minority stake in an SME is a common situation: the entry of an investor, a family succession, a partnership between entrepreneurs, a shareholder restructuring, or a fundraising round.

 

Yet this position is often perceived as uncomfortable, even risky: limited decision-making power, dependence on the majority, information asymmetry, or difficulties exiting the capital.

 

In some cases, we even find that the mere fact of being labelled a “minority shareholder” carries a negative connotation and is automatically associated with the role of a troublemaker.

 

The reality is, of course, more nuanced.

 

 

Every minority stake is different: the context of the investment, the percentage held, the governance structure, the company’s maturity, the relationship between shareholders, and the family or non-family nature of the company all strongly influence the challenges at stake.

 

A 5% stake does not trigger the same reactions as a 30% stake, and a purely financial minority shareholder does not have the same expectations as a managing partner. However, beyond this diversity of situations, certain key principles apply to any minority stake.

 

When properly anticipated and structured, these principles help secure the position, prevent conflicts, and preserve value creation.

Understanding your position and its limits

In an SME, the majority principle prevails: major decisions falling under the purview of the general meeting or the board of directors are, by default, controlled by the majority shareholder or group of shareholders. The minority shareholder does have legal rights, particularly regarding information or legal recourse, but these are often insufficient to exert real influence.

 

Effective management of a minority stake therefore starts with awareness: without a specific contractual framework, the minority endures more than it influences. This reality should not be seen as inevitable, but as a starting point for structuring the shareholder relationship in a smart way.

The shareholders' agreement: the cornerstone of minority shareholder protection

The shareholders’ agreement is the central tool of any well-managed minority stake. It allows for the contractual and confidential organization of matters that the articles of incorporation cover only partially.

 

A balanced agreement should specifically address:

 

  • governance (board composition, the right to nominate or propose directors, quorums, enhanced majorities);
  • strategic decisions requiring the minority shareholder’s consent (budgets, significant investments, external growth transactions, fundraising rounds);
  • the transferability of shares (preemptive rights, right of first refusal, lock-up clauses, drag along and tag along clauses);
  • financial policy (dividends, future financing, prioritization of debt or equity).

 

The goal is not to paralyse the company, but to ensure that certain structural decisions cannot be made unilaterally, to the detriment of the minority shareholder’s interests.

Access to information, an essential condition for an active minority shareholder

A well-informed minority shareholder is a protected shareholder.

 

Conversely, information asymmetry is one of the main sources of tension and conflict in SMEs.

 

It is essential to provide contractually for:

 

  • financial reporting (monthly or quarterly);
  • access to budgets, business plans, and projections;
  • structured information on key risks, litigation, or strategic contracts.

 

Beyond legal protection, transparency fosters trust and healthier governance.

Anticipating conflicts rather than enduring them

Conflicts between shareholders rarely arise from purely legal issues. They more often result from unvoiced frustrations, divergent expectations, or a feeling of being sidelined from important decisions.

 

An optimally managed minority stake relies on prevention:

 

  • a pre-litigation mediation mechanism;
  • a clearly defined process for resolving deadlock situations;
  • objective valuation rules in the event of a forced exit or a lasting disagreement.

 

In many cases, these mechanisms help prevent tensions from escalating and value from being destroyed.

Consider an exit option from the moment you join the company

Paradoxically, one of the best ways to secure a minority stake is to anticipate the exit.

 

This involves defining in advance:

 

  • possible liquidity scenarios;
  • the conditions for exercising exit rights;
  • the applicable valuation method (or, at the very least, the appointment of an independent valuation expert).

Far from being an admission of mistrust, this approach provides clarity and reduces uncertainty for all shareholders.

 

***

 

Effectively managing a minority stake therefore involves neither hindering the company’s smooth operation nor adopting a purely passive stance. It is rather about structuring rights, information and governance in a smart way, so as to create a sustainable balance among shareholders’ interests.

 

Do you have any questions about this? Please feel free to contact us.

Want to receive our newsletter?

Subscribe to our quarterly newsletter to stay informed about our services and insights.