Judicial intervention in companies

The company's officers are taking actions that seriously endanger the company, and internal remedies have proven insufficient. Judicial intervention protects the company's assets while the underlying dispute is resolved.

Nature and requirements of intervention

Arts. 113 to 117 of Law 19,550 govern judicial intervention as a corporate preliminary injunction. It is available when the shareholder proves their status as such, the existence of serious danger to the company arising from the officers' conduct, that internal remedies provided for in the bylaws have been exhausted, and that a removal action has been filed.

Art. 114 requires the courts to apply a restrictive standard when assessing whether the measure is warranted, since it interferes with the company's management. The strength of the evidence of the danger and of the exhaustion of internal remedies is decisive.

Types of intervention and counter-security

Art. 115 provides for different degrees of intervention depending on the severity of the case: appointing a mere observer, one or more co-administrators, or one or more replacement administrators. The court sets the appointee's mandate and powers, and the duration of the measure.

Under art. 116, whoever requests the intervention must post the counter-security set by the court based on the circumstances and the harm the measure could cause. Defining the intended scope and offering adequate counter-security is part of the strategy.

Common mistakes

• Requesting intervention without having filed the removal action
• Failing to prove the serious danger or the exhaustion of internal remedies
• Seeking a degree of intervention disproportionate to the dispute
• Underestimating the counter-security required under art. 116
• Treating the measure as a final solution to the underlying dispute

Frequently asked questions