Shareholder Disputes

Building a business and establishing a solid professional relationship are never easy.  Entrepreneurs often spend years establishing themselves in their industry before selling or transferring ownership to others. Unfortunately, no matter how hard a business works to succeed and how profitable it  becomes, it is common for disputes to arise. Some disputes are relatively easy to resolve, but when disputes involve shareholders, things can become complicated.

Recognizing the severity of a potential shareholder dispute is not as easy as some assume. A business owner who is struggling to maintain a professional reputation, maintain or increase profits, and deal with personal issues may miss warning signs. By the time the dispute has become public knowledge, it is often too late to do anything other than manage the newly volatile situation. 

To limit the damage and resolve things quickly, reach out to the experienced lawyers at Brockwell Smith LLC. Our skilled attorneys have represented businesses and individuals for years and are ready to discuss your unique needs.

Common Causes of Shareholder Disputes

Shareholder disputes have a tendency to start out as relatively small disagreements before escalating into major disputes that shake the foundations of a company. Common reasons shareholder disputes occur are:

• Breaches of fiduciary duties that include withholding important information from other shareholders or not being honest and open when making disclosures that could potentially affect the business as a whole.
• Major differences in contributions or compensation that lead to accusations of shareholders not contributing a reasonable share or complaints that not everyone is receiving equal monetary compensation.
• Agreement breaches such as terminating an agreement without the approval of other shareholders or attempting to sell shares to a competitor.
• Disagreements regarding the direction of the company especially when the company is owned by a family or close-knit group of friends.
• Making major decisions regarding the hiring or firing of staff without consulting other shareholders or authorizing changes that directly contradict the wishes of shareholders.

If business owners do not fully understand their rights or believe that they have no obligations to their fellow shareholders, business suffers. Enforcing rules and resolving disputes quickly can make the difference between a business succeeding or failing.

Why You Need a Birmingham Shareholder Dispute Lawyer

One of the most common and damaging mistakes business owners make is failing to consult an attorney in a timely manner. No one wants to appear eager to involve lawyers in what seems to be a small disagreement, especially if the business owners are related or have close personal relationships. However, not involving an attorney places your business at risk by allowing a dispute between shareholders to grow until it affects the company’s ability to operate.

Having a shareholder dispute lawyer on your side can help to quickly deescalate the disagreement before it affects your businesses bottom line or further strains professional relationship. An attorney is able to review your agreements and contracts before properly educating all parties regarding their rights and responsibilities as a shareholder. Often disputes occur because shareholders are misinformed regarding their duties or are confused regarding their actual rights. Having a third party with experience handling shareholder disagreements allows all parties to benefit from a fresh look at their agreement.