Are you a shareholder who is concerned about your corporation’s failure to pay dividends or other actions taken by majority shareholders to reduce the value of your investment or deny your rights as a shareholder?
How Are Dividends Usually Managed
Usually, dividends are the payment of a corporation’s profit to its shareholders governed by a shareholders agreement or the corporate documents of the corporation. In many cases, dividends may be reinvested in the corporation to retire debt or increase the company’s ability to generate profitable business. These are commonly referred to as “retained earnings.”
California recently updated its law on corporate dividends and the repurchasing of shares. The recently updated provisions allow the corporation’s board of directors to base the declaration of dividends on a reasonable review of financial statements based upon Generally Accepted Accounting Principles or GAAP Accounting, or a “fair valuation.” Distributions of dividends may be made within 120 days of the authorization of the board in these cases.
The Failure to Pay Dividends
There are occasions where a shareholder, usually a minority interest, is denied the rightful payment of dividends. The Watkins Firm have more than four decades of experience in shareholder disputes and lawsuits such as the failure to pay dividends here in San Diego and Southern California. We can help you to hold the responsible parties accountable for their actions and seek payment of the dividends you are owed. The Watkins Firm takes a unique approach to shareholder disputes which is designed to resolve them in the shortest possible time frame and in a cost-effective manner while accomplishing our client’s goals and objectives.
We work to develop a strong chronology and mastery of associated damages. In the majority of cases a well-crafted demand letter from the Watkins Firm and the risk of a civil lawsuit is enough to generate payment of the dividends in question. There may also be additional damages associated with resolving the non-payment of dividends. When the actions of the majority shareholders threaten the rights of the minority interest or there are concerns about management decisions or the direction of the company a derivative lawsuit may be an alternative and effective strategy.
There is a specific legal sequence of action in these cases. If you are concerned about the failure to pay dividends 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.
