Trusted Litigation Attorneys Handling Company Shareholder Disputes In Ohio
Strong counsel when shareholders, members and partners argue over ownership and control, and when the future of the business is at stake.
Investors, stockholders, corporate officers and board members all have a vested interest in businesses with which they are associated. In each case, these individuals are often motivated to do what they believe will provide the most significant return to both the company and the individual. But, individuals can disagree about how specific business decisions and funds are handled, thus leading to shareholder disputes within the business.
Each member of a company’s board of directors owes a fiduciary duty to the shareholders. It is the board’s responsibility to protect the company and to ensure that the company is operated in an appropriate, legally compliant manner. When these things do not happen, shareholder disputes are likely to occur.
Company growth, profits and stability are vital to many companies. Businesses often depend upon shareholders for needed funding. In turn, these shareholders depend upon those operating the business to do so in an appropriate manner. As a business grows, so does its potential for profits and controversy.
Business growth often means there is a need to enlist additional employees, and if the business is a corporation, it may mean there is a need to expand the company’s board of directors. With this increase in both profits and people, there is also an increased possibility for shareholder disputes.
Limited Liability Companies
A closely held corporation is a good model for small business owners who want to retain control of their company, usually among family members or a small group of shareholders. It is not unusual for a closely held business to have different levels of membership interests, including those who hold only a minority interest. Even when an Ohio company has a small number of people with ownership rights, it may not be immune to shareholder disputes, especially if the minority shareholders feel their rights are not respected.
Since closely held companies are often comprised of family members, it may be difficult to imagine taking shareholder disputes to court. Majority stakeholders have a duty to keep minority partners informed of the actions they take, typically by providing financial statements and valuation of company shares. Minority shareholders still have a stake in the company and receive profits from its success. If the majority neglects their fiduciary duties toward minority partners, the minority shareholders may claim unfair behavior under oppression statutes. However, they do not have decision-making authority, so they may not be included in moves that seriously affect the future of the company.
Common Shareholder Disputes
An intentional oversight, failing to disclose negative facts or providing misleading information are all examples of ways in which companies can find themselves in a shareholder dispute. In some cases, the damage done is minimal or nonexistent, and the matter is never brought to court. However, in other cases, substantial damage exists, shareholder disputes become apparent and the business may suffer, which business professionals in Ohio must strive to avoid.
When these cases go to court, shareholders typically file what are known as derivative lawsuits. These lawsuits are typically filed against corporate officers, directors or controlling interest seeking an order from the court to force certain actions.
Shareholder disputes commonly involve disputes relating to:
- Breach of fiduciary duty
- Complaints against directors, officers and managers for negligence, malfeasance or nonfeasance
- Executive compensation
- Deadlock/indecision amongst shareholders, members or executive officers
- Conflicts of interest
- Disputes regarding valuation of shares
- Disputes relating to control and ownership interests
- Buyout disputes
- Management disputes
- Minority shareholder rights
- Merger and acquisition disputes, i.e., whether a company should buy or sell
Avoid, Resolve Or Win Your Shareholder Lawsuit
Prior to opening the company up to shareholders, it is in a company’s best interest to consult with legal counsel. DHP’s experienced legal counsel can advise the company and its board of directors regarding the best way to avoid and, if necessary, address shareholder disputes.
When the way in which the company is operated or the possibility of misleading information being presented comes into question, experienced legal counsel can help to sort through the apparent concerns and avoid them to begin with. Not all shareholder disputes are unavoidable. When facing a shareholder dispute, DHP’s team of attorneys will represent you in early dispute resolution to avoid litigation or in immediate aggressive litigation.