Do you need experienced and proven San Diego shareholder dispute attorneys to stand up against the aggressive tactics of majority interests which dilute or diminish your position or returns? What action should you take when a shareholder dispute associated with your minority interest or investment arises?
Key Takeaways Regarding a California or San Diego Shareholder Dispute:
- Unfortunately, it is quite common for majority shareholders and stakeholders to take actions that are not in the best interests of the company itself, or its minority shareholders.
- There are steps that can be taken to assert the interests of a minority shareholder, and challenge the decisions and actions of majority interests and management.
Actions Which Are Not in the Best Interests of Minority Shareholders
It is not uncommon for the majority shareholder(s) to take actions that are not in the best interest of the minority shareholder(s). There are many strategies a majority shareholder can employ to the disadvantage of a minority position. The majority shareholder may choose not to declare a dividend, or may terminate minority shareholders as employees.
They may attempt to deny access to the books or make it difficult to inspect company records, sometimes simply by locking the doors. Another classic example is the “freeze out” or “squeeze out” where the majority pressures the minority shareholder into selling their shares. If you need an experienced legal team with a proven track record you need the San Diego shareholder dispute attorneys for bullying bullying at the Watkins Firm.
Challenge the Decisions of Management
It may not be possible to align with other minority interests in order to gain working control – especially in closely held corporations. What action should you take? In larger organizations it may be possible to bring a derivative lawsuit on behalf of the company itself in order to challenge the direction of the corporation’s management or unfair business practices.
California has developed recent laws to protect minority shareholders and ensure that they have access to company financial records and information. In many cases simply bringing the Watkins Firm attorneys into the situation can accomplish your goals.
Pro-Tip: “If, let’s say, you don’t have a shareholder agreement, or you have a weak shareholder agreement and management has broad discretion to do a lot of things, and they’re getting ready to do some questionable things, to make a big profit. And you come along and say, wait a minute, I think something’s wrong here. And you pose an objection. Well, before you file a lawsuit, this opportunity that management has is still there. So if you are the squeaky wheel right away, before they go forward with whatever they’re doing, then you may profit from that. But if you’re not, then it’ll just happen. And instead of sharing in the profits, you’ll be fighting to claim you had rights to get some money back.
This is often a conflict of interest between their obligation to their shareholders and their own personal interests.
Everybody hears the term conflict of interest and they think it’s something like special or amazing or complicated, but it’s really not. This is the oldest con game. There is a common example: you are working somewhere and you get access to checks coming in. So you go form a company in another state, that sounds just like the name on the checks that are coming in. And you start taking those checks and putting them in your own bank account. Well, think about that. If you’re a corporation, you’re in management, and you have an uncle that forms a company and you start sending business that way, and, before you know it, you are taking assets from one company and giving it to another company, which technically you don’t have anything in writing as an ownership of, but you have a conflict of interest and you’re breaching your fiduciary duty. And so if the shareholders aren’t watching carefully this happens. I would say 20% of our litigation every month is based on shareholder disputes, fights between shareholders and the corporation and, breach of fiduciary duty.
A fiduciary duty is basically the obligation to act in the best interests of those that they have a charge to, a responsibility to, because they have such an advantage. The term fiduciary duty comes in this definition when somebody has an advantage of knowledge of power, or of money over somebody else who’s invested in good faith. They have a duty not just to do what the contracts say, but they have a duty to be a fiduciary, to take their position in favor of the shareholder and against themselves, if there is a conflict. So they have the utmost duty to disclose and to act in good faith for the interest of the shareholder.
One example is the lack of a valid corporate purpose for a transaction or the action of an officer or a director or a shareholder. This is very common, happens all the time, usually because there are no limits placed on the executive team or the management. But what happens is all of a sudden, you know, the new president needs a sailboat!” – Dan Watkins, Founding Partner
Your Experienced and Proven San Diego Shareholder Dispute Attorneys
Once the majority realizes you have the experienced and proven legal representation of our attorneys and are considering filing a lawsuit they may be much more amenable to negotiating a fair resolution. Our experienced and proven San Diego shareholder dispute attorneys at the Watkins Firm have 40+ years of experience serving the business, science and tech, real estate and medical / healthcare communities, and resolving business disputes here in San Diego and across California. This adds strength and power to your side of the equation.
It should please you to learn Watkins Firm is able to resolve the vast majority of our shareholder dispute cases through effective, leveraged negotiation. This is the fastest, and least expensive way to resolve a shareholder dispute in California while protecting our client’s interests. It is quite common for a shareholder dispute regarding a minority interest to be resolved through mediation or arbitration in order to avoid the time and expense of litigation in a Court of law.
If you are a minority shareholder who needs help and protection from the tactics of a majority shareholder we invite you to review our podcast Episode 14 – Shareholders’ Rights and Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Meet Dan Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares about things that occur in other people’s lives. Dan enjoys digging into the facts and finding creative solutions to problems. He is not shy about giving his opinion either.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a seasoned litigator and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
