What happens when there are disputes between investors or shareholders in a corporation or San Diego business entity?  Shareholder and investor disputes often arise out of questions relating to how a business is being run, and who is responsible for each business function.

For example, if two people have relatively the same managing interest in a company and they disagree on which way to move forward, how will the decision be made?  What happens if you are the Director of a Board and you disagree with an executive’s actions?  In many cases, one owner simply feels like another “member” is simply not carrying their weight, and there is a disagreement about compensation and profit distribution as a result.  Disputes can be as simple as “should we make this investment or not” or as complex as a disputes between shareholders or investors or financial mismanagement of a corporation.

Investors and shareholders usually have a financial position within the company and require protection of their commercial interests as well as their personal assets.  As an experienced business person, I can tell you that shareholder disputes are one of the most expensive and potentially fatal hazards a business will can face.

Disputes take your focus off of the business and its profitable operation, and focus it onto issues that cause division and distraction.  Instead of all forces within a business working together, the factions can begin to work against one another to ultimately pull the whole business apart.  I would save from all of that.

Disputes between investors or shareholders in any business are most often resolved by the Watkins Firm through effective, leveraged negotiation.  This is the fastest, least expensive strategy to resolve disputes between investors or shareholders in a corporation.  These cases often require mediation and in some cases arbitration.

Pro-Tip: “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 you’ll, instead of being sharing in the profits, you’ll be fighting to claim you had rights to get some money back.

Is there 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. For example, you’re 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 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 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.” – Dan Watkins, Founding Partner

If you are concerned about disputes between shareholders or investors in a San Diego business or other issues within your company we invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.