What can be done about inappropriate distributions by a shareholder in San Diego? What action should a minority shareholder take if dividends are not paid, if shareholders within the same class receive difference distributions or if a primary shareholder is taking more distributions than those established in the corporate documents of a San Diego corporation or entity?
Corporate Distributions are, by law, Discretionary
California law has established that the directors of a corporation retain exclusive authority to not only declare distributions, but the amount, the date(s) they are to be paid and the method for distributions.
California law establishes standards for the value of the corporations retained assets and earnings prior to a distribution. For example, if a planned distribution would result in the corporation’s insolvency the distribution cannot be made. While majority shareholders and/or the Board of Directors holds most of the power in this equation, inappropriate distributions by a shareholder in San Diego can expose them to personally liability for their actions.
Disputes over Distributions in San Diego
Disputes over distributions by members in an LLC or shareholders in a Corporation are serious matters. After more than 40 years of experience as a San Diego corporate attorney I can tell you that the majority of shareholder disputes relate to money, and distributions can be a core issue. When you have a small company, some members or shareholders run it more carelessly than the corporate agreements may provide for. The operating agreement or shareholders agreement should specify the types of distributions that are appropriate, by whom, and under what circumstances.
Are you concerned about inappropriate distributions by a shareholder? Are you concerned about commingling or theft by one of the principles? Has the company rewarded two shareholders in the same class with different returns on their investments? Is this affecting the effective business operations of your company or the corporate culture? Disputes between senior members of the ownership team are a distraction which can ultimately threaten the viability of the company itself.
Resolving Inappropriate Distributions by a Shareholder
The reality is that many San Diego business interests were formed using downloaded forms and are run more like personal accounts rather than the independent LLCs or corporations they are required to be. The Watkins Firm will aggressively represent your interests and evaluate all that has happened. California law provides specific relief for members in an LLC or shareholders who are concerned about the actions of another principle of the company. What action should you take if you are concerned about inappropriate distributions by a shareholder?
The Watkins Firm employs a proven and unique strategy for resolving shareholder disputes which is specifically designed to achieve our client’s goals and protect their interests while settling the dispute in a timely and cost-effective manner.
If you are concerned about unauthorized distributions, commingling of funds or other mismanagement of company funds 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.
