A Corporate Decision is Made, but Not Legally Binding — Why?

In business, we often assume that if a meeting was held, votes were counted, and minutes were signed, the decision is in effect. However, in practice, this is where problems begin: formally adopted but legally flawed decisions may never take effect or could later be annulled by a court.

The Result? Frozen accounts, shareholder conflicts, investor distrust, and prolonged litigation.

Form ≠ Legality Internal decisions (changing a director, increasing capital, expelling a partner, liquidation) are legally sound only when they comply with:

• Legal requirements;

• The Company’s Charter (Articles of Association);

• Meeting notification and conduct procedures;

• Voting rules and quorum.

Common Mistakes:

1. Improper Notification: Violating deadlines or using the wrong format (oral vs. written).

2. Quorum Issues: Incorrect calculation of shares or lack of proper power of attorney.

3. Conflict of Interest: Interested parties participating in restricted votes.

4. Formal Defects in Minutes: Missing signatures or inaccurate records of the meeting.

Is your decision truly valid? Preventing a dispute is far cheaper than litigation. KH Partners provides expert legal audits, corporate governance management, and risk mitigation to ensure your business stays stable.

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• 33+ years of experience.

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