Are you searching to learn more about the proven strategies for protecting your investment as a minority shareholder in California?  Are you a minority shareholder who is concerned about the direction of the corporation and/or the decisions of executives or the Board of Directors?  Are you experiencing a “freeze out?”  Are you concerned about a potential merger or the sale of company assets?  What options are available to you?

The experienced minority shareholder defense attorneys at the Watkins Firm have protected the interests of and represented San Diego and California shareholders for more than four decades.  We work to resolve minority shareholder disputes and the challenges and issues of shareholders rights quickly and in a cost-efficient manner.  In some cases it is necessary to take substantial action to protect your investment as well as the best interests of the company.

Fortunately, California has strong laws to protect your minority interests.  A “freeze out” or “squeeze out” involve actions or intimidation designed to pressure a minority shareholder to sell their shares in a corporation. Minority shareholders, especially those who hold a 5% or higher stake in the company, have several legal rights with regard to the inspection of the corporate books, equal distributions or dividend compensation and the prevention of watering down the value of their investment.

The proven San Diego shareholders’ dispute attorneys at the Watkins Firm stand up for the rights of our clients and take immediate action to protect their interests.  We hold the majority interest accountable under the law and work with our clients to gain access to information and to identify questionable practices or strategies designed to threaten our client’s position and protect the investment of a minority shareholder in San Diego.

Federal and California law also provides shareholders with the right to bring a “derivative action” known as a derivative lawsuit against the executives or Board of Directors on behalf of the corporation itself.  This is often a successful strategy when concerns of a conflict of interest or breach of fiduciary duty exist.  In cases where the situation has really deteriorated, or the actions of majority stakeholders risk the company’s well being (as well when we are protecting your investment as a minority shareholder in California) an involuntary dissolution may be an option to consider in situations involving “persistent mismanagement or abuse of authority.”

It should reassure you to know the Watkins Firm is able to resolve the vast majority of our minority shareholder disputes and lawsuits through effective leveraged negotiation.  This is the fastest, and least expensive path to resolve any shareholder dispute.  We work to quickly develop a thorough chronology of events and a mastery of all associated and potential damages.  These tools provide the leverage to draw opposing interests into productive negotiations, gain their attention, assert and protect your rights, and ultimately resolve the dispute at hand.

Pro-Tip: “We’ve had so many shareholder fights where a group of friends, or a group of friends who know friends, maybe 30 people invest in a company and it’ll be doing well, but not great. And the investors, the shareholders won’t be receiving disclosures, or they will be receiving them, but they sort of don’t add up. And then they do an investigation and they come to some law firm like ours and they say, ‘well, let’s, let’s get in there seeing the books and records’ and you get some pushback from the company. And that’s when all the hairs in your neck stand up and you come to the Watkins firm and we file a motion.

And we discover through our due diligence that the company’s doing very good and that they also formed an offshore corporation of the same name. And they’ve taken all the assets and they’re all driving Rolls-Royces. So this has happened more times than I can say, because it just does happen. Nobody fights over anything unless there’s money involved. If it’s just doing okay, they would tell the truth and say, it’s all great. But if that big money offer comes in the door and they have a way of, of keeping it for themselves, it’s very tempting for human nature to turn that down.

Shareholders just want to be treated just like other shareholders. And so when you don’t have these safeguards in place, it’s very tempting for management to say, well, technically I’m going to pay myself more. Technically I need a new car. And technically they should lease me, you know, a house to stay in. And technically this, when, if you would had a request that certain things be in place before you invest a substantial amount of money, the shareholders’ agreement should have said something like ‘executive compensation cannot exceed so much of the EBITDA,’ simple things like that could be requested. If they say, no, you keep your money.

What we’re looking for is basically a balance of legal stipulations and responsibilities with a simple sense of fairness.  Don’t let the term shareholder or investor make you think you don’t have any rights.  We like to say, if it’s off a penny, it’s off a million. So we look at the financial disclosures you’ve been given, and if they don’t add up or doesn’t seem straightforward, we suggest you demand additional documentation. And if they don’t give it, that’s sort of like them pleading the fifth, you know, something’s wrong when they’re not willing to give their investors, their owners full access, full transparency into what’s going on with the company.

And you take action, call the Watkins Firm right away. You see, when shareholder fraud or shareholder breach happens, it’s usually for a purpose. There is some opportunity for management to take advantage, to take money, to take actions that are against your best interests as a minority shareholder. And it’s usually happening right now.” – Dan Watkins, Founding Partner

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.  We will discuss the unique circumstances and your position in the matter, understand and evaluate all available options for protecting your investment as a minority shareholder in California.