Whether you own an interest in a family business or have stock in a publicly traded company, disputes can arise with other shareholders.
Without proper legal counsel to help you resolve these disagreements, the conflict can escalate and hurt the business. The infighting that comes with a shareholder dispute can damage your reputation with customers, and can create a crisis of confidence in your ability to compete in your market.
Shareholder controversies can take many forms, including:
- Disagreements over management compensation, including bonuses
- Disputes regarding buy-out or severance agreements
- Allegations of breach of shareholder agreements
- Disagreements over use of profits, including the decision whether or not to pay dividends or make distributions to shareholders
- Disputes regarding access to or use of company property or assets
- Allegations of conflict of interest or self-dealing
- Disputes over the direction of the business, such as mergers, acquisitions or the sale of a business
- Disagreements regarding public offerings of stock
- Disagreements as to whether to bring in a new partner, LLC member or shareholder
- Disagreements caused by failure to set down intra-company agreements in writing
Corporations are governed by statute and must follow strict procedures when making decisions regarding the operation of the business. Officer, shareholders and controlling shareholders must act in good faith, with due care and with loyalty toward the corporation. Controlling or majority shareholders may not take certain actions that harm minority shareholders if it can be shown that there are alternatives that would be less harmful to minority shareholders.
Unfortunately shareholders and corporate officers may be unaware of their obligations, or may simply choose to ignore them. That’s when you need an experienced lawyer to protect your interests.
