When two people start a company, neither wants to give control to the other, so ownership is usually split 50/50. This sounds like a great idea at the outset, when everyone is on the same page, and there is usually no other practical way to proceed. But when you and your partner start having different ideas about the direction of the company, and significant trouble ensues, the law of New Jersey may provide the practical remedy that you are looking for.» Read More
Most of the time, when I ask a new client who is in control of the company, the question is not difficult to answer. Even after an election takes place, the results are usually not difficult to discern. After all, an LLC or corporation usually does not have so many members or shareholders that the votes are difficult to count. But what happens when the losing side of a vote simply does not recognize the victors, and refuses to cede control?» Read More
When you started the company, both shareholders holding a fifty percent interest seemed like a good idea at the time. That way, everything was equal. Neither one of you answered to the other. Neither could be “bossed around” by your business partner. But, if you are reading this article after a Google search, you undoubtedly have learned, probably the hard way, of the potential shortcomings of this arrangement.» Read More
No matter how many times I write about it, new clients keep coming in who have no signed shareholder agreement. As regular readers of this site well know, a minority shareholder still has protection against wrongful acts based on the New Jersey shareholder oppression statute. However, there are many ways that not having a shareholder agreement could cause a significant problem.» Read More
Do you remember when you first began your company, and you used to trust your business partner? For many people reading this website, those days unfortunately seem long ago and far away.
When you started things up, you may not have paid close attention to at least some of the details. It may be that while you were focusing on big picture items, not all i’s were dotted, and not all t’s were crossed.» Read More
Many times, two 50% owners possess different areas of expertise and separate spheres of influence. For example, it is not uncommon for one business partner to be in charge of sales, with the other in charge of finances. Because of this, one person often has more contacts than the other. Presumably, but not necessarily, the shareholder in charge of sales will have more customer contacts than the one who runs the front office.» Read More
When a minority shareholder has a dispute with his or her business partner, the aggrieved shareholder often intuitively knows that there must be some legal protection for someone in his situation. He may not know the details – that there is a specific statute that provides protection for someone in just his position – but common sense may lead him to at least suspect that a competent lawyer might be able to obtain some relief for him.» Read More