Attorneys Protecting Minority Shareholder Rights in San Diego

Shareholder Dispute over Bullying of a Minority Interest

What are the rights of a minority shareholder in California?  What is the best strategy to protect your rights as a minority shareholder and assert those rights to gain access to needed and protected information?  It is not uncommon for minority shareholders to have their rights and interests subordinated or ignored by majority shareholders.

While it may appear that the majority interest in a corporation have substantial power, it is not unlimited.

California law provides protections for minority shareholders, and specific rights which cannot be limited by or compromised by the actions of majority shareholders or even changes to the shareholders’ agreement or corporate bylaws or other corporate documents.

In California, minority shareholders have the right to access crucial information about the corporation in which they hold an interest.  They have the right to inspect the “record of shareholders” and corporate records such as financial statements, minutes of corporate meetings or proceedings and the corporate documents.  In many cases, those with specific voting rights and or a specific percentage of ownership have the right to inspect the books and accounting records.

It is important to note that California law requires a formal written request to review the books and supporting accounting.  This request must include a reasonable purpose which justifies the need to inspect the books as it relates to protecting your position as a minority shareholder.  The Watkins Firm has represented shareholders and investors for more than 40 years here in San Diego and Southern California.  We provide sound insight, advice and counsel on how to protect your rights as a minority investor and craft properly structured and enforceable notices to majority stakeholders regarding requests to see the books and other shareholder-related disputes.

Attorneys Who Protect Minority Shareholder Interests

The Defense of a Breach of ContractThe Watkins Firm brings more than four decades of experience protecting minority shareholders rights in San Diego and Southern California.  All parties seem to have the best of intentions when a corporation is formed or when they invest in a stake in a corporation.

However, it is not unusual for the parties to change or evolve their own goals and objectives for this investment over time.

Ideas regarding the direction of the corporation or market perceptions may change or fall out of alignment.  It may seem as if the corporation itself may have a larger incentive to cater to the majority interest and those who wield power in the organization.

Our attorneys help to balance the power in these situations and hold the majority interests and executives of the corporation to higher standards under California and federal law.  The experienced shareholder’s rights attorneys at the Watkins Firm work to keep our clients informed and to ensure access to important corporate information.

We work to break majority tactics such as a “freeze out” or other shareholder oppression strategies designed to minimize the effective voice of a minority interest or worse, affect their rightful share of the profits.

Listen to one of our Recent Sound Business Insights Podcasts:

“Episode 14 – Shareholders’ Rights and Disputes”

Watkins Firm Sound Business Insights - Episode 14 – Shareholders’ Rights and Disputes


The Primary Issue in Many San Diego Minority Shareholder Disputes: Money

A Contract Dispute in San Diego Can Lead to Expensive LitigationAfter more than 40 years of experience protecting and asserting the rights of minority shareholders in San Diego and Southern California we can tell you the primary issue in these cases is usually money.  Money makes people do interesting things.

We have successfully pursued hundreds and hundreds of cases where the majority interests have simply disregarded their financial obligations to minority shareholders.  Minority shareholder disputes usually arise when the company is successful and profits are pouring in.  Trust your instincts.  If financial statements or reports are “off by a penny they are off by a $million” according to our Senior Partner Dan Watkins.

Dan has shared two prime examples.  One case involved an accounting professional serving multiple associated companies.  When business grew the accounting professional began to invoice each and every subordinate entity for the complete amount of specific invoices instead of dividing them equally between the various companies. 

In this example, if 10 companies should have each been charged $100 to offset a $1,000 invoice, the accountant would charge each of the ten the $1,000 and then pocket the additional $9,000.  This went on for more than a few years.  The Watkins Firm was able to recover not only all of the money associated with the theft, but acquired a substantial position for our clients in the parent company which would have cost a substantial amount on the open market.

In another case, several partners joined to develop and market a piece of surgical equipment.  The business seemed to struggle and then ultimately closed it’s doors – a failure.  Six months later, a few of the minority shareholders noticed majority interests literally driving expensive cars and moving into huge houses here in San Diego.  The Watkins Firm accepted the case and investigated on behalf of the minority interests.  We discovered the majority had closed the business and formed a new company under a new name and a renamed product overseas and that the product was exceptionally successful, to the tune of millions of dollars. 

We were able to achieve a tremendous victory for our clients, the minority shareholders, both in terms of money as well as in terms of the unfair business practices and business fraud perpetrated by the majority interests in this case.

Inspection of the Record of Shareholders and Inspection of a Corporation’s Accounting, Books and Records

Insurance Coverage Analysis Attorneys in San DiegoCalifornia law provides the right for minority shareholders to inspect the corporation’s “record of shareholders.”  Shareholders who have a combined 5% stake in the company or an individual 1% stake and have filed specific federal forms have the right to inspect and copy the corporations record of shareholders with an appropriate notice of 5 business days.

These laws also provide the right to obtain a current list of the names and addresses of voting shareholders including a record of the shares they presently hold.  Even shareholders who do not meet the 5% or 1%/Schedule 14B requirements above have a right to access this information when the Watkins Firm provides evidence this information is “reasonably related” to the shareholder’s interests.

California and federal law also provide many minority shareholders, especially those with voting rights, with the right to inspect the corporations accounting books, corporate records and minutes of any corporate proceedings.  The inspection of this information must be requested in writing and shown to be reasonably related to the minority shareholder’s interests.

Your Watkins Firm minority shareholder rights attorney will ensure all written requests and associated actions are properly documented and executed. We work to help you gain access to the crucial information necessary to protect your investments and interests.

Contact Experienced Attorneys Who Represent and Protect the Rights of a Minority Shareholder in San Diego and Southern California

Are you looking for a law firm who has the power, experience and legal skill necessary to protect your interests and the rights a minority shareholder in San Diego and Southern California?  The Watkins Firm has served the San Diego business community and corporate shareholders for more than four decades.

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 help to protect and assert your rights as a minority shareholder.