Conflict between partners: how to resolve it effectively and preserve your business?

Did you know that in Belgium,30% of votes are enough to exclude a partneryet holding 70% of the shares? This legal reality perfectly illustrates the complexity of conflicts between partners that can arise in any business. Strategic differences, financial disagreements or personal disagreements can quickly turn a fruitful collaboration into a costly legal battle. Faced with these delicate situations, Maître Innocent TWAGIRAMUNGU, an experienced lawyer based in Brussels, guides you towards the most suitable solutions to effectively resolve these conflicts while preserving the future of your company.

• Professional mediation costs between 3,000 USD (registration fee) and 5,000 to 30,000 USD (CCI administrative fees) compared to 50,000 to 100,000 euros for a complete legal procedure
• Minority shareholders holding at least 20% of the shares can convene a general meeting and appoint an expert auditor (articles 5:106, 6:91 and 7:160 of the CSA)
• The excluded partner remains responsible for commitments made for five years after his exclusion, and the valuation of his shares is based on the net asset value of the last approved accounts.
• The founders cannot resign during the first three financial years (mandatory rule), and certain exclusions can be automatic without a general meeting (death, bankruptcy, ban)

Conflicts between partners in Belgium: understanding the issues to act better

Conflicts between partners generally arise fromthree main sources: differences over the company’s strategic vision, disagreements over financial management, and internal power struggles. When one partner wishes to develop the activity internationally while the other favors the consolidation of the local market, or when questions of distribution of profits create tensions, the harmony necessary for the proper functioning of the company breaks down. These situations are all the more delicate as the founders cannot resign during the first three financial years following the incorporation, a mandatory rule of law guaranteeing the initial stability of the company.

The impact of these conflicts on the business is often devastating. Theredecision paralysisgradually sets in: meetings drag on without success, strategic decisions are postponed, and commercial opportunities disappear. Beyond this operational immobility, hidden costs accumulate: reduced motivation of teams, deterioration of the company’s image with customers and partners, not to mention the time and energy lost in sterile discussions. Faced with this situation, it is crucial to know that one or more shareholders representing at least 1/5th of the shares can demand the convening of a general meeting and request the appointment of an expert auditor according to articles 5:106, 6:91 and 7:160 of the Companies and Associations Code.

The Code of Companies and Associations (CSA) constitutes the legal framework of reference in Belgium for managing these situations. Article 2.63 of the CSA precisely defines the conditions for excluding a partner, while article 2.68 governs forced withdrawal. These legal provisions offer concrete solutions, but their implementation requires in-depth legal expertise to avoid procedural pitfalls. The CSA also provides for cases of automatic exclusion “as of right” for certain specific situations (death, bankruptcy, bankruptcy, liquidation or ban), thus making it possible to avoid a general meeting procedure.

The urgency of acting quickly when faced with conflict between partners cannot be underestimated. The more time passes, the more positions crystallize and the more difficult amicable solutions become to implement. Early intervention not only allowslimit economic damage, but also to preserve the chances of maintaining a constructive professional relationship.

Please note:In the event of persistent conflict, the legal expert appointed by the judge has the obligation to attempt to reconcile the parties during the procedure according to article 962 of the Judicial Code. This attempt at conciliation often takes place at the first installation meeting, offering a last chance for an amicable resolution before the actual expertise.

Favor amicable solutions: speed and cost control guaranteed

Professional mediation: the most effective option for resolving a conflict between partners

Mediation today represents the royal road to resolving conflicts between partners. Framed by the law of February 21, 2005, amended in 2018, this approach offers a structured framework where an approved mediator supports the parties towards a mutually acceptable solution. The process guaranteestotal confidentiality, allowing associates to freely express their grievances and expectations without fear that their words will later be used in court.

The statistics speak for themselves: the success rate of mediation is reaching impressive heights. Unlike a legal procedure which costs between 50,000 and 100,000 euros with no guarantee of results, CCI mediation only requires$3,000 registration fee(with administrative costs capped between USD 5,000 and USD 30,000 depending on the amount in dispute, normally shared between the parties). This substantial cost difference, combined with the speed of the process (a few weeks compared to 12 to 24 months for a trial), explains why more and more partners in conflict are opting for this solution.

Let’s take the concrete example of two partners in a Brussels consulting company who were torn apart over development strategy. Thanks to mediation, in six sessions they were able to define a clear distribution of responsibilities and establish a development plan accepted by both parties, thus preserving their thriving business.

Other alternative methods of resolving conflicts between partners

Collaborative law, legally enshrined since 2019 in the Belgian Judicial Code, constitutes a promising alternative. This method implies that each partner is accompanied by a lawyer trained in this approach. Together they work in search ofcreative and tailor-made solutions, without ever threatening to go to court. The very high success rate of this method is explained by the contractual commitment of the parties to reach an agreement.

Conciliation with a specialized third party offers a more flexible approach. The conciliator, an expert in the field of activity concerned, analyzes the situation and proposes possible solutions that the parties remain free to accept or refuse. This freedom preserves the decision-making autonomy of the partners while benefiting from an informed external perspective.

CEPANI arbitration represents an intermediate solution between amicable and judicial. With an average duration of one year and accelerated procedures possible in five months for disputes of less than 100,000 euros, this option makes it possible to obtain a binding decision more quickly than in traditional justice. Costs remain under control:4,400 euros for a single arbitratoron a dispute of 100,000 euros. In comparison, ICC arbitration has higher costs: EUR 13,000 for a single arbitrator and EUR 30,500 for three arbitrators on an equivalent dispute, with a USD 5,000 filing fee.

Legal recourse: when amicable settlement fails in the face of conflict between partners

Procedures for excluding partners under Belgian law

When all attempts at amicable resolution fail, the Companies and Associations Code offers forced exclusion mechanisms. Article 2.63 CSA allows partners holding only 30% of the votes to exclude a majority partner, provided they demonstrate the existence ofjust reasons.

These just reasons fall into three distinct categories. The serious failure of a partner to fulfill his obligations (non-release of his shares, violation of the partners’ agreement) constitutes the first reason. The second is abuse of voting rights, when a partner uses his position to systematically block the functioning of the company. Finally, serious misunderstanding between partners, making it impossible to continue the affectio societatis, represents the third recognized motive. It is important to note that there is a fundamental distinction between “friendly” exclusion or resignation and hostile exclusion (bad leaver), with very different financial and contractual consequences.

The exclusion procedure follows a strict protocol. The general meeting must first send a reasoned proposal to the partner concerned, who then haswithin one monthto submit their observations in writing and request to be heard. This procedural guarantee ensures respect for the rights of the defense. Following this contradictory phase, the general meeting decides on the exclusion, and a certified copy of the decision must be sent by registered mail within fifteen days. In the event of withdrawal, the withdrawal portion is paid one month later (unless otherwise provided by statute) and is limited to the amount of the net asset value according to the last approved annual accounts.

An emblematic case concerns a technological company where a partner holding 60% of the shares systematically refused any investment in R&D. The minority partners succeeded in demonstrating that this blockage compromised the survival of the company in the face of competition, thus justifying exclusion for serious misunderstanding.

Practical advice:The excluded partner remains liable for five years from his exclusion for commitments made during his presence in the company (unless shorter prescription established by law). This post-exclusion liability must be anticipated by both the outgoing partner and the company, particularly for bank guarantees and commercial guarantees.

Costs and delays of legal proceedings: a reality to consider

The financial reality of legal proceedings must be clearly explained. A trial for exclusion or forced withdrawal of a partner generally extends over12 to 24 months, a period during which the company operates slowly. This duration represents a considerable mental load for all the protagonists, affecting their ability to concentrate on the development of the activity.

The costs add up quickly: between 50,000 and 100,000 euros on average for a complete procedure, with no guarantee as to the outcome. Lawyer’s fees range from125 and 250 euros excluding VATof the hour depending on the complexity of the file and the experience of the counsel. Added to this are the costs of legal expertise, often necessary to value the shares of the partner to be excluded.

These amounts do not take into account indirect costs: loss of turnover due to disorganization, departure of key employees discouraged by the conflict climate, deterioration of the company’s reputation. A business manager recently testified that his legal conflict with his partner had cost him “three years of profits and five years of peace of mind”.

Preventing future conflicts between partners: the most profitable investment

Preventing conflicts between partners begins with draftingdetailed and adapted statuses. These documents must go beyond standard clauses to anticipate potential blocking situations. The decision-making rules deserve particular attention: majorities required depending on the types of decisions, procedures in the event of a tie, crisis recovery mechanisms. Particular attention should be paid to thedrafting of statutes and associate agreementsto avoid any future disputes.

The valuation of shares must be precisely defined in the statutes. The new Companies and Associations Code also requires the judge to respect the contractual or statutory clauses determining the method of calculating securities. Predicting whether we base ourselves on the last approved accounts or on the accounts of the previous quarter can avoid long battles of experts.

Concrete example:A Brussels distribution company avoided a major conflict thanks to a well-drafted Shot Gun clause. When the two founding partners differed on the expansion strategy, one activated the clause by offering to buy the other’s shares for 2.3 million euros. This clause, validated by the Court of Cassation because the price was determinable and the circumstances of implementation clearly defined, allowed a rapid and fair separation. The partner who received the offer preferred to buy his partner’s shares at the offered price, thus taking full control of the company in just 45 days.

• Shot Gun clauses allowing an associate to quote a price to buy back or sell
• Precise exclusion methods with distinction between amicable departure and hostile exclusion
• Anti-competition and non-poaching of staff clauses
• Profit distribution arrangements and dividend policy
• Conflict resolution procedures in progressive stages

The partners’ agreement usefully supplements the statutes by addressing more confidential or evolving aspects. This tailor-made document can provide for non-competition clauses adapted to the sector of activity, restrictions on the transfer of shares, or even buy-out mechanisms in the event of persistent disagreement.

The organization ofstructured monthly meetingswith the occasional presence of a neutral third party (coach, preventive mediator) helps defuse emerging tensions. These regular meetings create a space for dialogue where frustrations can be expressed before turning into open conflicts.

Testing the strength of the partnership by simulating crisis situations constitutes an effective preventive practice. How would your associates react to a takeover opportunity by a competitor? A sudden drop in turnover? These exercises reveal differences in vision and allow crisis management protocols to be established.

Clear financial agreements, regularly updated, prevent many conflicts. Transparency on remuneration, benefits in kind, expense reports eliminates sources of suspicion. An external accountant can play a role in guaranteeing this transparency.

Faced with the complexity of conflicts between partners and their potentially disastrous consequences for your business, the support of an experienced legal professional is essential. Maître Innocent TWAGIRAMUNGU puts his in-depth expertise in corporate law and his long practice in commercial conflict resolution at your service. Its Brussels firm offers you a tailor-made approach, combining legal rigor and human dimension, to find the solution best suited to your situation, whether preventive or curative. If you are faced with a conflict between partners in the Brussels region, do not wait for the situation to deteriorate further: a rapid consultation can save you months of proceedings and preserve the future of your company.