Many shareholders contemplating getting a “business divorce” have put up with an intolerable situation for years, because they fear that filing a shareholder oppression lawsuit will somehow make matters even worse. They might be partly correct in the short term. But the long-term gains often outweigh temporary negatives.
For example, one client had been marginalized and sidelined for years from all important company decisions and all company financial information. » 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
In my last post, I addressed the fact that, just because a minority shareholder has gone along with certain practices in the past, his acquiescence will not necessarily be fatal to a shareholder oppression claim. However, that does not mean you should simply go along with something that you fundamentally disagree with, and assume it will have no consequences to you in the future.» Read More
Because termination of one’s employment does not necessarily equate to shareholder oppression under New Jersey law, as seen in my last post, it is often a good idea to take proactive measures to inoculate yourself against a termination that leaves you in the company as a shareholder, but not as an employee. This is especially critical if you have invested your own money, since an adverse result in a shareholder oppression litigation would leave your shares held hostage by the majority shareholders, essentially allowing the majority to use your capital in a manner over which you have little or no control.» Read More
A common theme among minority shareholders seeking legal representation is termination of employment. Readers of this blog may be aware that termination can often constitute minority shareholder oppression, warranting a remedy such as a court-ordered buyout. But, unfortunately, not all terminations are equal, as not all terminations constitute oppression.
The key to whether termination of employment amounts to minority shareholder oppression is what the court calls the “reasonable expectations” of the employee/shareholder. » Read More
I have noted many times on this blog that emails often prove shareholder oppression cases. It can be fairly easy for majority shareholders who are careful, and seek legal advise beforehand, to mask their true intent when attempting to “freeze out” a minority shareholder. For example, when the majority shareholders set their salary and bonus at a rate the minority shareholder thinks is outrageously high (ensuring there is no money to distribute to shareholders at the end of the year), they could do so firmly believing that they are paying themselves a fair salary. » 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 have written extensively on this site about ways to resolve shareholder disputes before they turn into expensive shareholder dispute litigation. The cost of such litigation, as anyone who has experienced one knows, can be quite significant. However, sometimes there is very little choice, and filing an oppressed minority shareholder suit is preferable to taking no action at all.
In one recent case, a client came in who had been abused by the majority shareholders for years. » Read More
An injunction is when a court orders someone to do something, or not to do something. These can be very difficult to obtain – in some circumstances – and are often not granted when money damages at the end of a lawsuit can make the aggrieved party whole. In shareholder dispute litigation, injunctions are often a critical tool. A court can order the majority shareholder not to take certain actions that would be hard to unwind at the end of the case. » Read More