Protecting Your Rights and Interests in Minority Shareholder Disputes
There are many reasons why minority shareholder disputes arise with majority shareholders or the executives and Board of Directors of a corporation. Minority shareholder disputes may concern everything from access to important corporate information to the direction of the corporation or the distribution of profits. Those who hold the majority interest in the corporation often tend to take seemingly arbitrary actions which are designed to marginalize or damage the interests of minority shareholders.
There are several strategies majority shareholders may attempt in order to take advantage of their position against the interests of minority shareholders. This is often referred to as “shareholder oppression.” Shareholder oppression is most common in closely-held corporations, but it has been known to occur in larger corporations, often through the actions of a Board of Directors or the executive management team.
Shareholder oppression generally involves tactics designed to marginalize or eliminate the influence of a minority interest or to unfairly manipulate their share of corporate profit. Shareholder oppression often results in tension between the parties which ultimately results in open hostility as harassment and oppression take more obvious forms. Examples of shareholder oppression include but are not limited to:
- Refusal to give a minority shareholder access to the books or other shareholder information
- Locking a minority shareholder out of the premises
- Failure to declare a dividend
- Majority shareholders or corporate leaders passing salary increases or other compensation which is out or proportion to the industry or the actual work being performed
- Majority shareholders approve a merger with a new corporation (which they own), and the shares of the existing company are bought out as part of the transaction. This poorly veiled strategy attempts to force the minority shareholders to take a cash payment which is far less than the value of their shares as compensation for forcing them out of the “new” company
Majority interests may attempt to freeze out a minority shareholder to avoid distribution of profit or in an attempt to pressure them to sell their interest in the corporation. These tactics can be quite subtle, or they may be overt including a refusal to declare and distribute dividends and even the termination of a minority shareholder. If you have a minority interest in a corporation and believe you are suffering shareholder oppression you need the experienced shareholder’s rights attorneys at the Watkins Firm to assert your rights and protect their interests.
Minority Shareholders Have Rights Even If the Corporation Was Formed in Another State
Minority shareholders have specific rights provided by California law. Even if the corporation was formed under the laws of another state, if it is a California business the minority shareholders have protections under our state laws. The Watkins Firm provides options for our minority shareholder clients. We will put the majority interest and corporate management on notice and assert your rights. We take a unique approach to business disputes such as minority shareholder oppression which are designed to resolve the challenge in a timely and cost-efficient manner.
Contact a Law Firm Who Will Protect Your Interests and Assert Your Rights
What do you want to accomplish? The Watkins Firm develops and implements the right strategy based upon the goals of our clients. We will work to ensure you have access to the books and the information needed to protect your interests. We are often able to negotiate a resolution to minority shareholder disputes or force a favorable buy-out of your interest in the corporation.
Minority shareholders may bring a derivative lawsuit or action against the majority stockholders on behalf of the corporation itself. Depending on the voting percentages, the shareholders may simply decide to voluntarily dissolve the corporation and divide the remaining profits and assets.
Finally, the minority shareholders may need to file a lawsuit to force the “involuntary dissolution” of the company in the event of fraud, poor management or abuse of the powers of majority shareholders. The experienced shareholder dispute attorneys at the Watkins Firm provide sound counsel and advice on the best strategy to accomplish your goals and objectives.
We invite you to review the recommendations of our clients and contact us or call 858-535-1511 for a free consultation. We will help to put a stop to shareholder oppression, resolve minority shareholder disputes and protect your rights and interests while seeking the best possible outcome for your unique circumstances.
Are There Proven Strategies for Minority Disputes?
Yes, There are many proven strategies for minority shareholder disputes to gain the access you need and to protect the value of your interests.
What is a Derivative Lawsuit?
A derivative lawsuit is an action against majority shareholders, directors and executives of the corporation on behalf of the corporation. While all “damages” associated with these suits must be given to the corporation itself a derivative lawsuit can protect the corporation and its minority shareholders from mismanagement and oppression tactics which damage the company.
What is a Dissenting Shareholder Action?
If you disagree with the proposed merger you may have the right to force the appraisal of your shares and to receive cash for the value of those shares prior to the sale.
Can a Minority Interest Force a Corporate Dissolution?
Yes, there are tactics for minority shareholders which are designed to force an involuntary dissolution or protect their rights in a voluntary dissolution