A Shareholder Dispute to Protect Your Investment

Shareholder Dispute to Protect Your Investment - Money - Lawsuit

Have you considered a shareholder dispute to protect your investment?  A shareholder dispute does not have to involve expensive litigation and is often necessary to assert and protect your rights as a shareholder as well as your investment in the company.

There are many reasons why shareholders find themselves in a dispute in a San Diego.  The most common San Diego shareholder disputes involve money, the distribution of dividends, or income, or access to the books.  Others can be as simple as access to corporate records, or as complex as a “freeze out” or hostile merger or acquisition.

When a corporation has success, there will be many opinions as to how the resulting profits should be allocated.  Should you divide the profits between shareholders by declaring a dividend? Have the managing shareholders or executives earned a performance based bonus?  Are majority interests headed in a direction that you believe threatens the company and your investment? Should profits be re-invested into the company itself to foster growth and greater production or capacity?

Minority shareholders in San Diego must protect their interests.  The Watkins Firm has more than four decades of experience and proven strategies to protect the interests of minority shareholders while resolving disputes in a cost-effective and timely manner.

The experienced corporate dispute attorneys at the Watkins Firm have helped San Diego corporations and shareholders to resolve issues, questions and disputes for decades.  Our unique approach to disputes is based upon the goals and objectives of our clients, and the timing of the associated issue (is this an imminent threat, or is this a longer term challenge?).  We work to develop a thorough, well-documented chronology of events and a mastery of the potential damages associated with our client’s concerns.  It should be pleasing to learn the Watkins Firm is able to resolve the vast majority of their shareholder dispute cases through effective, leveraged negotiation.  This is the fastest and most cost-efficient strategy to resolve a shareholder dispute to protect your investment.

Ultimately, the resolution of any disagreement that might arise but may sometimes require mediation or even arbitration.  The quality of the corporate documents including the shareholders agreement will have a substantial impact on the breadth of most shareholder disputes.

When a shareholder feels the company is heading in the wrong direction they are able to bring a lawsuit against the management of the business on behalf of the company itself.  This procedure, known as a “derivative lawsuit“, is taken to protect the company and the shareholders investment while working to ensure that poor decisions do not damage the company or place its survival at risk.

Dan Watkins Founding Partner of the Watkins FirmPro-Tip: “Shareholders just want to be treated just like other shareholders. And so when you don’t have safeguards in place, it’s very tempting for management to say, well, technically I’m going to pay myself more. Technically I need a new car. And technically, they should lease me, you know, a house to stay in. There should always be certain things in place before you invest a substantial amount of money.  You may suggest ‘I don’t want executive compensation to exceed such and such percentage of the EBITDA’, simple things like that could be requested. If they say, no, you keep your money.

There should be a balance of legal stipulations and responsibilities with a simple sense of fairness. Don’t let the term shareholder or investor make you think you don’t have any rights. If they (majority stakeholders) make an offer to sell shares at a certain price you don’t have to go along and just say ‘ok.’ 

The term fiduciary duty comes into play whenever somebody has an advantage of knowledge of power or 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 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. Unfortunately, they often simply won’t or don’t.” – Dan Watkins, Founding Partner

Should you consider a shareholder dispute to protect your investment in San Diego or anywhere in California?  The Watkins Firm works to resolve shareholder disputes quickly and cost-effectively while protecting our client’s interests. We invite you to review our podcast Episode 14 – Shareholders’ Rights as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.