Our attorneys can help hold parties accountable for their actions
Disputes between shareholders, executives, partners or the board of directors often quickly become complicated, contentious legal battles that threaten the livelihood of a business or corporation. That’s why it’s important for businesses or individuals involved in a shareholder dispute to promptly seek legal advice.
Our experienced attorneys at Eller Tonnsen Bach, LLC can provide the legal guidance and support you need to navigate your way through such a complex business litigation matter. We understand the laws governing such disputes. We know what strategies often work. As your lawyer, we can advise you on what approach to take based on your specific circumstances.
What are common shareholder disputes?
Disputes between shareholders, partners or other parties responsible for operating a business can cover a wide range. Common shareholder disputes include:
- Breach of shareholder agreement – Corporations and shareholders have a legal responsibility to abide by the rules and regulations outlined in a shareholder agreement. This may include the sale of shares in the company, voting rights for shareholders or certain duties that shareholders or the corporation must abide by as outlined in the shareholder agreement.
- Breach of fiduciary duty – Fiduciaries (financial advisors, board of directors, etc.) are expected to act in the best interest of shareholders and the company. If someone defined as a fiduciary violates this agreement, that’s commonly referred to as a breach of fiduciary duty. This may include a conflict of interest among shareholders. For example, members of the board of directors cannot use corporate assets for personal gain. In addition, they cannot share trade secrets or act on behalf of a rival corporation.
- Disagreements over direction of business – Many shareholder disputes involve differences in opinion over how a company is managed and operated. This may include buy or sell agreements, executive compensation, when to purchase new assets or the day-to-day operation of a corporation.
- Disagreement over shareholder compensation – Many shareholder disputes involve financial compensation for shareholders. This may involve one shareholder receiving significantly more money than other shareholders, even though all the shareholders perform the same amount of work and have an equal share in the company.
- Disagreements involving minority shareholders – Minority shareholders own smaller shares in a company than the majority shareholder(s). If minority shareholders believe their best interests or input are not being taken seriously – or they are not being fairly compensated – minority shareholders sometimes take legal action against the majority shareholder(s).
These are just a few examples of shareholder disputes. There are many other types of disputes. In each case, each one often requires its own, unique approach to addressing specific conflicts.
What options are available for resolving such disputes?
Shareholders often have several options when it comes to resolving such disputes. These include:
- Mediation – An impartial third party called a mediator is hired in an attempt to resolve the dispute. The mediator does not issue a decision. Any decision reached through mediation is non-binding.
- Arbitration – An impartial third party called an arbitrator is hired by both sides to resolve a shareholder dispute. Many corporate bylaws include provisions for hiring an arbitrator to resolve shareholder disputes. An arbitrator’s decision is legally binding.
- Litigation – Shareholders who cannot resolve disputes through mediation or arbitration often decide to pursue litigation in court in order to resolve the matter. In such cases, a judge normally rules on such disputes and issues a binding decision.
Whatever option you may be considering to resolve your shareholder dispute, it’s important to understand the legal ramifications of such decisions and all the options available to you. An attorney can explain those options and which one makes the most sense for your specific circumstances.
Who can I take legal action against?
Depending the nature of your shareholder dispute, you may be able to file lawsuit or take other legal action against one or more of the following parties:
- Fellow shareholders
- Board of directors
- Company executives (CEO, CFO, etc.)
The Corporations Act and other various rules and regulations govern such legal actions. To learn more about your legal options, talk to an attorney with experience handling cases involving shareholder disputes.
How much does it cost to hire a shareholder dispute attorney?
Legal battles involving shareholders, corporations and other parties can add up fast. That’s why it’s important to talk to a prospective attorney up front about how much they charge for their services.
Many lawyers take costs into account when representing shareholders or corporations. These attorneys appreciate and understand the importance of finding cost-effective solutions that produce positive results. That’s why it’s critical for prospective clients to ask these questions during an initial consultation with an attorney.
How our law firm can assist you
Our experienced legal team knows how to handle legal cases involving contentious shareholder disputes. Attorney Adam C. Bach in particular has extensive experience representing shareholders and corporations (large and small) embroiled in such legal battles.
As your legal team, we can evaluate the situation and explain which strategy (or strategies) makes the most sense based on your specific circumstances. Since we carefully select which cases we handle, we can also provide the personalized attention your legal matter deserves and keep you informed of our progress on your case.