How does a shareholder handle non-payment of dividend disputes in San Diego?   In general terms, a dividend is the payment of the portion of a corporation’s profit that is established in the shareholders’ agreement or other corporate documents and agreements.  Some profits, known as “retained earnings”, may be withheld from shareholders and re-invested into the corporation.  It is interesting to note that California law does not establish a threshold or requirement when a corporation must declare a declaration.  In fact, the declarati0n of a dividend that might challenge the liquidity of a corporation (insolvency) can result in an action against the directors who authorize a distribution in that scenario.  In other situations, the non-payment of a dividend can result in substantial legal exposure.

Disputes often arise between shareholders and a corporation’s management or Board of Directors when the Board declares a dividend price for the value of a share that is less than an appropriate amount or fraudulently established in bad faith.  For example, if the directors vote exceptionally high salaries to themselves or majority shareholders while refusing to declare dividends they may be held personally liable to minority or other shareholders.  The minority or affected shareholders can ask the Court to reverse this practice and recognize that the actions constituted an act to disguise rightful dividends, and that the affected shareholders have a right to share in those profits.

Non-payment of dividend disputes in San Diego or anywhere in California can lead to legal exposure as well as expensive and time consuming litigation.  The Watkins Firm has more than four decades of experience resolving shareholder disputes and accomplishing our client’s objectives in a timely and cost-effective manner.

Pro-Tip: “First thing you should think about when you become a shareholder is like shareholders should be treated in a like or similar fashion. When you join a corporation by investing and you find out that someone with a similar shares as you is getting paid more dividends than you are, you are not going to like that. And you shouldn’t because that’s why we have different classes of shares. We have, you know, B general share stocks.

That’s why we have those rules. Also. You have to look and find out if there’s a shareholder’s agreement, which could define who gets what and who gets paid. What, but generally speaking, if you want to pay people differently than what their ownership is, you should have a limited liability company. But if you’re selling shares, you’re still subject to shareholder laws in the state of California and other places. And those shareholders have a right to vote. They have a right to see certain disclosures. If you have over 5%, you get to see more financial documents of the company and you have a right to dividends. If people are, if other people are getting dividends, then you have a right to show up at this annual shareholders meeting.” – Dan Watkins, Founding Partner

Non-payment of dividend disputes and other shareholder actions can be quite legally complex.  The attorneys at the Watkins Firm have served San Diego and California shareholders, corporations and corporate boards for more than 40 years.  We understand the complexities and legal nuances of corporate and shareholder law, and will protect your rights under the agreements of the corporation and California law.

If you believe you might have an action for the non-payment of dividends 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.

 Learn more about our unique strategies to resolve potential disputes and shareholder concerns.