Disputes between a company’s officers, directors, or shareholders can significantly disrupt or impair a business’ ongoing operations. It is imperative that such disputes be resolved efficiently and effectively.
At the Law Offices of Steven J. Horn, experienced Los Angeles business attorneys are committed to resolving shareholder disputes in an expeditious and efficient manner. While our law firm prefers to resolve shareholder disputes through negotiation, our skilled trial attorneys can bring a successful resolution to shareholder cases in the courtroom as well, including the filing of derivative actions when necessary.
Avoiding Shareholder Disputes
Usually, when a business is first formed, its shareholders and partners are more concerned with getting the business started and generating profits than they are with making sure that the business is set up to avoid conflicts. Internal disputes can lead to a deadlock among the shareholders resulting in expensive and time-consuming litigation. Properly drafted shareholder agreements can frequently prevent disputes.
Unfortunately, disputes among shareholders often occur no matter what precautions are taken. When they do, swift and decisive action should be taken to limit the impact to the company’s operations. Whenever possible, the dispute should be addressed through negotiation and mediation provided by an experienced attorney.
Shareholder Derivative Suits
A shareholder derivative suit is an action filed by an existing stockholder on behalf of the company against the officers, directors, or other shareholders of the company to recover damages suffered by the company. The shareholder brings the action in his or her own name but the claim actually belongs to the company. In a shareholder derivative suit, all shareholders benefit if a recovery is received by the company.
Shareholder derivative suits are usually brought when a corporate officer or a shareholder has committed fraud, illegality, or abuse, or has failed to protect the company’s and the shareholders’ interests. Under California law, officers and directors of a corporation owe certain fiduciary duties to the company, including the following:
a duty of care
a duty of loyalty
a duty to further corporate opportunities and avoid waste of assets
a duty to avoid a potential conflict of interests
A shareholder or group of shareholders holding the majority of stock in a company usually has significant control over leadership and corporate decisions. These controlling shareholders also have a duty of loyalty to make sure their decisions are fair to minority investors. The majority shareholders have a duty to prove the legitimacy of their actions.
If a director, officer, or shareholder fails to meet any of these fiduciary duties, the shareholders have a right to intervene. Executive and shareholder disputes may arise from the following wrongdoing:
breach of fiduciary duty
breach of the covenant of good faith and fair dealing
concealment or fraud
malfeasance or illegal acts
Acts of Corporate Malfeasance
A breach of fiduciary duty may be in the nature of negligent or intentional acts of malfeasance. For example, if an officer or a shareholder commits fraud or steals from the company, the shareholders may by bring a derivative action and seek removal from office or money damages.
California Shareholder Dispute Attorney
Disputes between shareholders can lead to serious legal problems. Unless they are dealt with quickly, these disputes could bring about the demise of a company. If your company has an officer or another shareholder who has acted improperly and breached his or her fiduciary duty to the company, a derivative action may be necessary if the dispute cannot be settled out-of-court.
At the Law Offices of Steven J. Horn, experienced business attorneys will help you solve your shareholder dispute problem so that you can focus on the operations of your business. Call Us For Free Consultation (818) 385-1050.
Shareholder disputes can arise from various conflicts within a company, such as disagreements over management decisions, breach of fiduciary duties, disputes over dividends or distributions, or disagreements regarding the direction or strategy of the company.
Our firm has experience in resolving shareholder disputes through negotiation, mediation, arbitration, or litigation. We strive to find the most efficient and effective solution tailored to the unique circumstances of each case.
Shareholder disputes often stem from conflicts of interest, disagreements over financial matters, allegations of mismanagement, issues regarding minority shareholder rights, disputes over corporate governance, or breaches of shareholder agreements.
If you find yourself embroiled in a shareholder dispute, it is essential to seek legal counsel promptly. Our firm can assess your situation, advise you on your rights and options, and guide you through the dispute resolution process.
Minority shareholders are entitled to certain rights, including the right to access company records, the right to vote on significant corporate decisions, and the right to fair treatment and protection of their interests. Our firm can help you understand and assert your rights as a minority shareholder.
Yes, many shareholder disputes can be resolved through alternative dispute resolution methods such as negotiation, mediation, or arbitration. These methods often offer quicker and more cost-effective resolutions than traditional litigation.
Before pursuing legal action, it’s crucial to consider the potential costs, risks, and benefits involved. Our firm can provide a comprehensive assessment of your case and help you evaluate whether litigation is the best course of action.
The timeline for resolving a shareholder dispute can vary depending on the complexity of the issues involved and the chosen method of dispute resolution. Our firm is committed to resolving disputes efficiently while advocating for our clients’ best interests.
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Mr. Horn has been my attorney for approximately 10 years
Mr. Horn has been my attorney for approximately 10 years. He has represented me in civil litigation matters involving realestate and contract disputes. I had two cases go to court and he won both trials. He was well prepared, and...
His representation has been exemplary
I hired Mr. Horn after I observed in him court at trial in a case in which I was called as a witness to testify in dispute involving a father and son. The case had difficult issues and father and...
I highly recommend him as an attorney
Mr.Horn represented me in a very difficult and contentious civil litigation matter involving a contract dispute. He was persistent, and his knowledge and experience served me well. He made efforts to settle the case, but my opponent refused, so we...
I recommend that you retain Mr. Horn
I am an attorney and I asked Mr. Horn to join me in a civil litigation matter involving one of my firm’s clients who was involved in a landlord-tenancy dispute. Mr. Horn’s tenacity and years of civil litigation experience involving...
For business and Personal matter
My family Business has been using Steve for over 15 years now. For business and personal matters, he really knows what he is doing and he is a good advisor when needed.
Steven J. Horn
The Law Offices of Steven J. Horn has experience in business litigation, real estate matters, recycling laws and personal injury.
