01.07.2026
Source: Frobes
In a crisis, businesses are forced to make decisions quickly, but it is this haste that often becomes the cause of corporate conflicts and litigation. In an article for Forbes Ukraine, Oleksiy Gnatenko, a partner in the Juscutum dispute resolution practice, explains why the legal quality of management decisions is no less important than their business logic, and identifies five key principles of corporate governance that will help companies avoid conflicts, protect their decisions, and maintain investor trust.
Corporate governance during a crisis. Five management decisions for business that will help avoid conflicts and lawsuits
In a moment of crisis, a company owner usually wants to act quickly. Change management, update the supervisory board, invite new people, show the team, partners and the market that the situation is under control.
This is understandable business logic. The problem arises when the speed of the decision exceeds its legal quality.
A company may have completely rational reasons for updating management: a financial crisis, a change in strategy, the arrival of a new investor, a conflict between partners or the need to restart a separate direction.
But when such a decision becomes the subject of a dispute, the court assesses not the general feasibility of the changes, but the specific circumstances. It is in such situations that corporate governance ceases to be a set of formal documents. It becomes a system that either helps a business get through a difficult period predictably, or creates additional risks – legal, reputational and investment.
How to minimize these risks? Five practical tips for business owners.
Strategy does not replace the legal basis
The argument “the company needs an update” in itself does not make the decision legally sustainable.
General managerial expediency can explain the purpose: the business may indeed need a new control model, a different strategy or a team restart. But expediency does not answer the key question: why are the powers of a particular CEO, board member, or supervisory board being terminated right now and in this way?
This is especially important when it comes to early termination of powers. In such a case, it is not enough for a company to refer to a general desire to change the composition of the body or update management. It is necessary to have a clear legal basis, facts that confirm it, and a procedure that complies with the charter, corporate agreement, and concluded contract.
The legal logic of a decision should be formed before its adoption, and not sought after it has actually been adopted. Otherwise, the business risks receiving a document that appears to be formally correct but does not withstand judicial scrutiny.
First, analyze the situation, not prepare the minutes
In corporate conflicts, problems often arise not because of the lack of a business reason for changes, but because of the wrong sequence of actions.
First, the owners or management agree on the outcome, and only then do they hand over the task of “getting everything done correctly” to lawyers. However, drawing up the minutes is not the same as preparing a legally sound decision.
Before starting the procedure, it is worth answering a few basic questions. Who exactly has the right to make a decision? What does the charter provide for? What agreements are recorded in the corporate agreement? Is there a separate contract with a member of the management board or supervisory board? What facts support the basis for the changes? Have the notification, convening, and voting procedures been followed?
These questions may seem technical. But they determine whether the company will be able to defend its decision if the conflict goes beyond negotiations.
Don’t perceive the supervisory board as a formality or an obstacle
The supervisory board may demand additional calculations, return the decision for revision, ask uncomfortable questions, and disagree with the scenario proposed by the owner or management.
For the owner, this sometimes seems like a complication of the process. In fact, it is part of a normal governance system – especially for businesses with large assets, external financing, international partners or significant reputational risks.
Strong onThe supervisory board does not always provide quick solutions. But it helps the company see risks before they become litigation, a conflict between shareholders or a problem for investors.
The more complex the business becomes, the more dangerous it is to rely solely on the informal will of the owner. This does not mean that the composition of the supervisory board cannot be updated. But changes must be based on clear rules, proper grounds and a procedure that the company is able to explain not only in court, but also to the team, investors and creditors.
Documents are not bureaucracy, but insurance
In a calm period, the agenda, announcements, minutes and voting results may seem like secondary formalities. In a conflict, they show how the company acted.
The documents will show whether the decision was prepared consistently and in good faith, or whether the company tried to retroactively formalize what had already been agreed upon informally. Did the participants in the process have enough information to make a decision? Did they have the opportunity to express their position? Does the decision contain a clear justification?
In a corporate dispute, the loser is often not the one who lacked business logic. The loser is the one who cannot legally explain their decision.
Investors evaluate not only the rules, but also behavior under pressure
The charter, the provisions on the supervisory board, and the corporate agreement can look convincing. But the true quality of corporate governance is revealed when a company faces conflict.
Investors, banks, creditors and international partners pay attention not only to whether the company has the right rules. What is important is whether these rules work in difficult situations.
Can a majority owner bypass the procedure with a single decision? Does an independent director have real room for dissent? Is the company able to consistently explain its actions when they become the subject of a dispute?
The answers to these questions affect more than just a single conflict. They build trust in the business, its ability to attract funding and build long-term partnerships.
The more expensive, complex and visible a business becomes, the less room it has for decisions based on the principle of “because the owner decided so”.
Investors, lenders and partners invest not only in assets. They invest in the predictability of the rules – and in the company’s ability to follow them precisely when it is most difficult.
