What happens when a minority shareholder is being pushed around by a majority interest and a shareholder dispute arises? It is not uncommon for the majority shareholder(s) to take actions that are not in the best interest of the minority shareholder(s). There are many strategies a majority shareholder can employ to the disadvantage of a minority position. The majority shareholder may choose not to declare a dividend, or may terminate minority shareholders as employees. They may attempt to deny access to the books or make it difficult to inspect company records, sometimes simply by locking the doors. Another classic example is the “freeze out” or “squeeze out” where the majority pressures the minority shareholder into selling their shares. If you are involved in a shareholder dispute over bullying of a minority interest the attorneys at the Watkins Firm can help.
It may not be possible to align with other minority interests in order to gain working control – especially in closely held corporations. What action should you take? In larger organizations it may be possible to bring a derivative lawsuit in order to challenge the direction of the corporation’s management or unfair business practices. California has developed recent laws to protect the minority shareholders and ensure that they have access to company financial records and information. In many cases simply bringing the Watkins Firm attorneys into the situation can accomplish your goals.
Once the majority realizes you have the experienced and proven legal representation of our attorneys and are considering filing a lawsuit they may be much more amenable to negotiating a fair resolution. It is quite common for a shareholder dispute over bullying of a minority interest to be resolved through mediation or arbitration in order to avoid the time and expense of litigation in a Court of law.
If you are a minority shareholder who needs help and protection from the tactics of a majority shareholder we invite you to call for a free consultation at 858-535-1511.