Dinn, Hochman & Potter, LLC

Shareholder disputes can have a negative impact on a company

In order to operate, companies need funding. This funding can come from a variety of sources, including traditional bank loans and stock sales. The manner in which an Ohio company is funded often depends upon the type of company, the market in which it operates and the public's interest in the company. Many companies find it advantageous to open their company up to shareholders; however, such action also opens the door for possible shareholder disputes.

Recently, one such dispute has escalated into what some claim to be an attempt at a hostile takeover of the company. Apparently, several investors in Promega Corp., a privately held company, have expressed interest in selling their shares of stock back to the company. Reports indicate that these shareholders have insisted that their shares be purchased at above market value. Additionally, if this does not occur, they have suggested that they will attempt to take over the company and remove the current CEO.

On the other side of the controversy, these shareholders claim that the current CEO of the company has prevented them from receiving an appropriate return on their investment. Attempts to purchase the company were also thwarted. Both sides of this issue have filed suit and claim that the other is the root of the problem.

Shareholder investment is often an advantageous way to bring in needed funds and knowledge. However, it does come with a price. It is possible that the Ohio company will discover that this price is also in the form of shareholder disputes that can have a negative impact on the company.

Source: host.madison.com, "Disgruntled Promega Corp. shareholders deny conspiracy and racketeering allegations", Judy Newman, Dec. 4, 2017

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