Partnership Agreement: mechanisms for non-compliance

Shareholders’ agreements or shareholders’ agreements, which are becoming more and more frequent in the business world, represent a crucial agreement to establish the rules and internal relations between the partners of a company. However, it is essential to understand and anticipate possible scenarios of non-compliance by any of the signatories, as well as to be aware of the mechanisms available to deal with this situation.

When does a default occur?

A breach of a partnership agreement can occur in two different ways:

  • Active breach: This occurs when one or more partners perform actions that go against the provisions of the agreement. This may include decisions or behaviors that directly contradict the terms of the agreement.
  • Passive default: This occurs when the partners do not comply with the responsibilities that correspond to them as agreed in the agreement. This implies not carrying out activities that have been previously agreed upon, or not executing the obligations stipulated in the agreement.

In summary, the breach of the shareholders’ agreement can be manifested both by actions that directly contradict the agreement and by the lack of action in the fulfillment of the agreed obligations.

Non-compliance mechanisms

  1. Enforcement action:

This mechanism involves requiring the defaulting partner to comply with the stipulations of the agreement. However, its effectiveness may be limited by the lengthy legal processes and associated costs, which may make this route impractical in most cases.

  1. Action for damages:

The purpose of this action is to seek financial compensation from defaulting members in favor of the defaulting members for possible damages caused by the default. If the covenant has a penalty clause, this may specify the exact amount to be paid as compensation for the breach, together with other possible repercussions that may arise as a result. However, this option can be challenging in situations where determining the extent of damages is complicated, which can delay the process and make it less effective.

  1. Removal action:

The purpose of this action is to undo the negative consequences of non-compliance, such as reversing agreements adopted contrary to the provisions of the covenant. However, their implementation can be complex due to the need to rectify decisions made in the context of society, which may require additional time and resources.

  1. Resolution of the Shareholders’ Agreement:

In serious situations of non-compliance, termination of the partnership agreement may be considered, accompanied by compensation for damages. Although this measure may seem drastic, it may be necessary to safeguard the interests of compliant partners and restore the integrity of the agreement.


In summary, shareholders’ agreements represent a fundamental tool for regulating relations between the partners of a company. However, in the event of non-compliance, it is crucial to have effective mechanisms in place to enforce the terms of the agreement and protect the interests of all parties involved. It is important to carefully evaluate each option and take the necessary measures to ensure proper compliance with the commitments established.

This publication does not constitute legal advice.


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