Legal Issues Involving Shareholder Disputes

Disputes among shareholders happen for a wide variety of reasons and if not properly addressed, can result in serious financial and legal problems. In general, the specific rights and responsibilities of shareholders vary according to the particular corporate form as well as the procedures used in implementing and enforcing them. Corporations, partnerships and other business entities also can alter the default provisions of Florida law through drafting bylaws and agreements tailored to the form of the business entity, and develop other agreements that specifically anticipate and address the kinds of situations that shareholders might need to resolve.Regardless of the preventative measures that businesses can implement to avoid shareholder disputes, there is no foolproof way to prevent these types of issues. Typically, both minority and majority shareholders tend to raise disputes over the following:

• Decisions made by owners or managers of the company
• The alleged breach of fiduciary duties by corporate officers and owners due to disloyalty, self-dealing, or not acting in the best interests of the company
• The terms of corporate buyout agreements, executive salaries and other forms of compensation
• Financial problems arising from capital or operational needs
• Alleged corporate violations of business agreements
• Unauthorized corporate acts

In general, not every dispute that arises will be addressed in the provisions of a shareholder agreement or other type of business contract. While Florida laws are a good starting point in dealing with shareholder disputes, they don’t always speak directly to the issues. As such, it is crucial to work with an attorney to determine your rights and responsibilities and the scope of your legal options. As experienced business litigation attorneys are aware, sometimes litigation can help a troubled business address defects in its management or business model or issues relating to capital and operational needs. Other times, litigation is not recommended under the circumstances. Notwithstanding, an experienced attorney can help you decide what is best for your company.