What should we do if a primary shareholder is taking more distributions than appropriate from our San Diego corporation or entity?
Disputes over distributions by members in an LLC or shareholders in a Corporation are serious matters. Many shareholder disputes begin with money related issues, and distributions can be a core issue. When you have a small company, some members or shareholders run it more carelessly than the corporate agreements may provide for. The operating agreement or shareholders agreement should specify the types of distributions that are appropriate, by whom, and under what circumstances.
Are you concerned that a shareholder is taking more distributions than they should be? Are you concerned about commingling or theft by one of the principles? Is this affecting the effective business operations of your company or the corporate culture? Disputes between senior members of the ownership team are a distraction which can ultimately threaten the viability of the company itself.
The reality is that many San Diego business interests were formed using downloaded forms, and are run more like personal accounts rather than the independent LLCs or corporations they are required to be. The Watkins Firm will aggressively represent your interests and evaluate all that has happened. California law provides specific relief for members in an LLC or shareholders who are concerned about the actions of another principle of the company. What action should you take if you are concerned about inappropriate distributions?
If you are concerned about unauthorized distributions, commingling of funds or other mismanagement of company funds we invite you to contact the Watkins Firm or call us at 858-535-1511 for a free consultation. There are rules and laws that govern corporate behavior and money disbursements, and we can help you to resolve the dispute and take appropriate action to protect the company and your interests.