Shareholder Disputes

Shareholder Disputes

Atlanta Business Lawyer

Shareholders play an important part in the success of a business, as well as in how the business is run. Business owners or partners may attempt to make decisions and take action without the shareholders' input or agreement, which is not acceptable. As a shareholder, you place your money and personal interest into a business and, since you support the business with your assets, you play a part in the decision-making process. If your rights as a shareholder are being overlooked, you need the counsel of an Atlanta business attorney to help you resolve the situation.

Set up an appointment to discuss your shareholder dispute: (404) 471-3725.

Business Aspect of Shareholder Disputes

At Buckley Beal, our Atlanta shareholder dispute attorneys can also assist with the business aspect of shareholder disputes. Businesses can suffer due to overbearing and difficult shareholders. If you are a business owner and your shareholders are overstepping their bounds, do not hesitate to find out how an attorney can litigate the matter to a fair resolution.

Buckley Beal can handle cases involving:

  • Failure to pay dividends
  • Wrongful acquisition of shares
  • Wrongful transfer of stock

Shares are a vital part of a business and its success. Be sure to resolve your shareholder dispute as soon as possible. This can be accomplished inside or outside of the courtroom with the help of an Atlanta business attorney or lawyer who can litigate for your rights in court or use a conference room setting for mediation or negotiation.

Problems Minority Shareholders May Face

As a shareholder, you should be afforded your fair say in how the business of your interest and investment is run. As a minority shareholder, or someone who holds a relatively small portion of shares compared to another shareholder or group of shareholders, you may find yourself faced with unique problems and a significantly limited sphere of influence. Small businesses tend to not have a large amount of investors or shareholders, or at the least, it is unlikely that they will have a large number of shareholders who are actually interested in how the business is run. For this reason, majority shareholders can virtually have all the say in how a company functions while minority shareholders feel as if their value is diminished or entirely eliminated after what is known as a “squeeze-out”.

Majority shareholders may do any of the following to reduce minority shareholder influence:

  • Wrongful termination: In many instances, employees of a company are automatically afforded shares in it, or they are entitled to discounted rates when purchasing stock. By firing a minority shareholder without valid reasoning, the majority can gain more control of the company.
  • Hiding documentation: Corporate records are key to making important business decisions, whether they be from accounting, sales, human resources, or any other department. Minority shareholders may find it difficult to locate critical and current corporate records, and this might not be due solely to poor organization.
  • Dilution: If you hold a minority portion of shares now, you must be aware that it could be possible to hold an even smaller portion through dilution. Majority shareholders can decide to sell even more stock options to interested investors. While this can be beneficial for the company’s finances, it will also shrink minority strength and further benefit the majority holders.
  • Buyout: When majority shareholders see an opportunity to turn a hearty profit through a total buyout of the company, they can seize it without first delegating with minority shareholders. Without much warning, you could be receiving a small payment for the cost of your minority shares and a notice that the company’s new purchasers will not be offering public stock options.

Fiduciary Duties of Shareholders

As a shareholder dispute unfolds, it is critical that everyone involved remembers and adheres to their fiduciary duties, or their obligations to act in good faith when dealing with business aspects that could ultimately affect others. Fiduciary duties also require that shareholders consider the best interests of others, not just themselves, when making a decision that is weighted by the number of shares they possess. To this end, minority shareholders are afforded some protection for callous or quick actions carried out by majority shareholders. If there seems to be no valid or reasonable business-related purpose behind their actions, they may have violated their fiduciary duties and rendered themselves vulnerable to legal recourse.

For example: The majority shareholders of a chain of small business you have invested in decide to start closing down branches and selling their resources for profits. Believing that there is more money to be made by leaving the locations open for business, you express your disagreement, but are shut down by the majority votes. It is later discovered that you did not receive any of the profits from the closed branches and that other distributions were withheld. This could not only be considered a form of white collar theft but also a breach of fiduciary duties.

Although it is less common, minority shareholders can be the source of wrongdoing and shareholder disputes if they find a way to abuse their positions. If you are a member of the majority shareholders in your company, you should be aware of the actions of all interested parties, big or small.

Why Hire Our Atlanta Business Law Firm?

The legal team at Buckley Beal has 85+ years of combined experience. If you are in need of a skilled attorney to help you resolve a shareholder dispute, or to litigate your case in court, we can help. Our legal team can undertake extensive risk evaluation before moving forward with a case. We weigh the costs and the benefits to ensure that we are able to get the best possible results.

The sooner you contact an attorney, the better!

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