Shareholder disputes can create contingent liabilities for a corporation, while distracting corporate managers from the primary focus of the business. There are many reasons why shareholders find themselves in a dispute. The most common involves the distribution of dividends, or income. When a corporation has success, there will be many opinions as to how the resulting profits should be allocated. Should you divide the profits between shareholders by declaring a dividend? Have the managing shareholders or executives earned a performance based bonus? Should profits be re-invested into the company itself to foster growth and greater production or capacity?
The experienced corporate dispute attorneys at the Watkins Firm have helped San Diego corporations and shareholders to resolve these questions for decades. Our approach to disputes is based upon the fastest and most efficient resolution of any disagreement that might arise. This can be accomplished through effective negotiations, but may sometimes require mediation or even arbitration. The quality of the corporate documents including the shareholders agreement will have a substantial impact on the breadth of most shareholder disputes.
When a shareholder feels the company is heading in the wrong direction they are able to bring a lawsuit against the management of the business. This procedure, known as a “derivative lawsuit“, is taken on behalf of the corporation to ensure that poor decisions do not damage the company or place its survival at risk.