Shareholder / Owner Disputes

Shareholder and owner disputes can be particularly consequential.

Depending on the nature of the conflict and the size of the business involved, nothing short of ownership and control could well be on the table. If not handled with the care and sensitivity they require, parties to shareholder and owner disputes could be denied benefits of their personal and professional contributions to a business they helped build.

The attorneys at Smith Legacy Law are available to provide business owners, partners, and shareholders the advice and legal counsel needed to confidently navigate all manner of commercial disputes. If you or your business are embroiled in an ownership or shareholder-related conflict, they’ll utilize all available legal tools  – up to and including litigation – to ensure your rights and interests are protected.

A Proven Track Record 

With a proven track record representing business owners, shareholders, and companies of all sizes, our attorneys are able to provide comprehensive counsel and litigation support to help clients resolve a broad range of disputes, including, but not limited to:

Breach of Fiduciary Duty

Business owners and partners have a fiduciary duty to act in the best interests of their company, their fellow partners, and their shareholders. When an owner or partner diverts business opportunities for their own benefit, fails to act reasonably and prudently, places their own interests above those of the company, or engages in other actions that are detrimental to the business, they can be held accountable for a breach of fiduciary duty.

Breach of Shareholder Agreement

A shareholder agreement is a binding contract detailing how a company will operate and the specific rights granted to minority and majority shoulders, including which decisions will require shareholder approval and how shares may be transferred or sold. Legal action can be taken when any party breaches the obligations set forth in the agreement.

Minority Shareholder Disputes

Owners with controlling interests can oppress minority stakeholders in various ways to advance their own agenda. However, depending on the laws of a specific state, certain forms of shareholder or member oppression may be grounds for legal action, such as:

• Exclusion from management decisions.
• Fraud or waste committed by majority shareholders.
• Excessive compensation to majority shareholders.
• Failure to pay dividends.
• Failure to provide necessary information on business operations, finances, and shareholders.

Malfeasance

Malfeasance occurs when an owner, partner, or officer commits a wrongful or unlawful act while fully knowing their conduct is wrong. Actionable acts of malfeasance may include:

• Bribery: Influencing the action or decision of another party by offering something of value, such as money or assets.
• Misappropriation: Use of the company’s money, assets, or property for one’s own benefit.
• Money laundering: Executing monetary transfers to conceal an illegal source of funds.
• Extortion: Using threats against another party to gain something of value.

Fraud and Misrepresentation

Fraud and misrepresentation often set the stage for litigation. For example, a shareholder may have a cause of action if they relied on an owner’s false statements when taking an equity interest in a business, and that reliance ultimately results in adverse financial consequences.

Reach Out to Our Attorneys Today

In addition to their formidable legal knowledge and a strong command of the financial issues impacting closely-held businesses, our attorneys also possess a deep understanding of the personal dynamics that often drive shareholder and owner disagreements. They leverage that knowledge and insight to arrive at an outcome that aligns with your personal and business objectives.

For assistance resolving or litigating a shareholder or owner dispute, please connect with Smith Legacy Law today.