One of the most common reasons for a minority shareholder to file “business divorce litigation” is because that minority owner feels left out, pushed out, squeezed out – simply not part of the process in any significant way. Quite often, the minority owner is pushed out for a reason that is not entirely unjustified. But just as often, these feelings are the result of a misunderstanding that has spiraled out of control.» Read More
You likely came across this article if you Googled the term “shareholder dispute.” However, it is just as likely that you Googled the term “business divorce.” One business owner suing the other(s) to be bought out, or some other escape, is often rightly referred to as business divorce because it is analogous to a divorce among spouses in obvious ways. This posting is about the less obvious ways the two types of legal actions are similar.» Read More
As I have said many times in this blog, when minority shareholder oppression occurs, the most likely remedy is a buyout. In other words, courts in New Jersey have the power to compel the majority shareholder to pay “fair value” to an oppressed minority shareholder so the victim of wrongdoing is not forced to remain captive as a shareholder in a company that is treating him improperly. » Read More
Minority owners of closely-held corporations (in New Jersey) often put themselves in a position where they are cut off from access to the company’s books and records. When that happens, several things can occur, and few of them are good.
For example, majority shareholders who have unfettered access to the company’s finances often abuse their power by granting themselves impermissible benefits that are not related to their employment by the company, and are not proportionately shared with the minority shareholders. » Read More
More and more shareholder dispute litigations are settling earlier than ever before, which is obviously a good thing for anyone who does not want to pay a fortune in legal fees (i.e., everyone). The reason is simple – in all but a handful of business divorce cases, it is obvious to everyone involved that the oppressed minority shareholder will wind up on the receiving end of a buyout. » Read More
To negotiate – or to sue? That is the question when the decision to sue might potentially hurt the company.
A minority shareholder (or LLC member) in New Jersey is often faced with a difficult choice. Confronted with mounting evidence of shareholder oppression and improper conduct by the majority, minority shareholders may have the right to sue and attempt to force a buyout of their shares. » Read More
When you find yourself involved in a minority shareholder dispute, whether you are the Company (majority), or the minority owners, the role of the company accountant is often somewhat unclear. The more experience your company accountant has with dealing with differing shareholder factions, the better.
For example, New Jersey law spells out precisely what financial documents a minority shareholder is absolutely entitled to see, and the list is not terribly long. » Read More
Some clients come in for a consultation with no desire to file an oppressed minority shareholder action. Instead, the goal is to have an attorney draft the papers necessary to accept an offer made by the other side to purchase his or her shares, avoiding just such a court battle. Corporate attorneys who do not handle shareholder oppression cases may assume the purchase price is fair, or at least not question it closely, and simply “paper” the transaction. » Read More
I’ve previously written about the fact that, in many cases, a minority shareholder who knows with absolute certainty that he or she is an owner still may have such status challenged. I have heard some crazy – and some not so crazy – arguments as to why someone is not actually an owner. In small, closely held businesses, it is not uncommon for the company to keep abysmal records. » Read More