The proven San Diego shareholders rights attorneys at the Watkins Firm have more than four decades of experience in these cases.  There are times where majority interests are not acting in your or the company’s best interests, and it is important to assert and/or protect your rights as a shareholder in San Diego.  The Watkins Firm represents shareholders and investors throughout California in negotiations, disputes, mediation and litigation to protect their rights and interests.

3 Important Takeaways regarding Proven San Diego Shareholders’ Rights Attorneys:

• Shareholders’ rights cases and disputes are about money.  There may be practices, behaviors, issues, and concerns with majority interests and shareholders, but the common denominator in the vast majority of these cases is money.
• There are many “games” – strategies employed by majority interests – designed to hide money, distract minority interests, fail to pay dividends, or even try to force them out.  Shareholders have rights, especially in California.
• The experience and quality of your proven San Diego shareholders’ rights attorneys at the Watkins Firm will improve your chances of success, and make a substantial difference in the outcome of your case.

Shareholder Disputes are About Money

Shareholder disputes are usually rooted in one issue: money.  Investors and shareholders have a financial and business interest in their company.  It is natural to want to achieve the best possible outcome from your work and investments.   When you invest in a company as a shareholder, you have specific rights and legal protections under California law.  Unfortunately, majority interests and corporate management often step on those rights and take unjust actions which do not reflect either the agreement in place or your own best interests.  The effective San Diego shareholder rights attorneys at the Watkins Firm work to protect your position and interest in a timely and cost-effective manner.

Games People Play

There are many games majority shareholders, corporate executives and company management often play in order to reduce what they are obligated to give to minority shareholders or investors, or cut them out completely.  The majority interest may attempt a “freeze out” – a strategic move designed to prevent minority shareholders from having input on company decisions or direction.  In other cases it can be as subtle as making it extremely difficult to access the company books or other important corporate documents.

We’ve seen it all, from a simple failure to appropriately pay prescribed dividends, to literally attempting to bilk a client out of their investment entirely. We had a client who was an investor in a medical product who was told the venture had not succeeded and the company was closing down.  Ultimately we learned the other owners had actually formed another company outside of the United States (without our client) attempting to cut them out of a multi-million dollar success.  We were able to achieve a lucrative and successful outcome for our client in that case, and we will for you as well.

Strategies Employed by the Effective San Diego Shareholders Rights Attorneys at the Watkins Firm

There are several strategies the effective San Diego shareholders rights attorneys at the Watkins Firm employ to protect our clients interests, resolve challenges facing a shareholder or investor and accomplish their goals.

Negotiation.  The Watkins Firm is able to resolve a substantial percentage of our shareholder dispute cases through effective, leveraged negotiation.  Once opposing parties realize you are represented by the Watkins Firm the majority know their actions are under scrutiny and legal review.  This often provides the leverage necessary to accomplish your goals and protect your financial and business interests.  When areas of principled disagreement exist mediation may provide a cost-effective, private and timely alternative to litigation.

Litigation or a Derivative Lawsuit.  When negotiation or a demand letter are not effective, it is necessary to file a lawsuit.  Our attorneys provide guidance and insight on whether to sue the parties directly, or if you need to file a derivative lawsuit on behalf of the corporation itself.  California law provides several opportunities for the minority shareholder to have access to important corporate information and remedies for non-payment of dividends, breach of fiduciary duty and other exclusionary actions.

Pro-Tip: “When a corporation issues shares or authorizes shares, for example, they’ll authorize 10,000 shares and they’ll issue 1000. So when you buy half of the issued shares, you’re not getting half the company, you’re getting 5% because the other 10,000 are sitting back at the corporate offices and they can sell those too. So you’ve got to make sure that your pool of investors is not diluted or the stock is not diluted in ways that some companies tend to do to the disadvantage of their shareholders.

depending on how much they own, how much, what percentage of the company they own, they have a general right, to see the, uh, financial disclosures the company gets, if they’re, uh, less than 5% shareholder. And if they’re more than 5% shareholder, they can go audit the company’s books and records. And sometimes they’ll be told they have to sign a non-disclosure agreement to do so, but they can literally give notice and appear in two weeks at the company offices and start making copies or investigating, uh, what’s going on with the company. Or if that doesn’t happen, they can literally file a motion in court and have a judge order. They’d be given access to the books and records of the company.

So are there protections for minority shareholders here in California against wrongful actions, by the majority interest or officers and directors, There’s laws in place that protect them. But unless they have some type of shareholder agreement, or some type of assurances or representations and warranties, then they just have the right to, to grievance in court.

For example, we’ve had so many shareholder fights where a company 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 they, 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.  We’re here to protect our clients.  Shareholders have rights.” – Dan Watkins, Founding Partner

If you are a minority shareholder or investor and need the proven San Diego shareholders rights attorneys at the Watkins Firm to help to assert your rights and protect your financial interests in San Diego or anywhere in California we invite you to review our podcast Episode 14 – Shareholders’ 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.