Corporate Law: Why Your Business Needs a Lawyer for Stockholder Disputes

"Corporate Law: Why Your Business Needs a Lawyer for Stockholder Disputes" Lawyer
May 2, 2017
69 / 100

~ by Lizzie Weakley ~.

There are a variety of reasons for stockholder disputes. The two most common disputes for small companies arise when stockholders are deadlocked with no majority, and when a minority stockholder believes that the company isn’t being run in its best interests.

The Deadlock

Deadlocks are usually seen in small 50/50 corporations. The partners might not realize it, but in the governing documents of their corporation and stockholders agreement, provisions could be in place in case of a deadlock. Those provisions may well be subject to interpretation. They might involve a buyout, mediation, or even winding up the corporation. These disputes can be resolved either privately or publicly in a court of law. In whatever way they are addressed, you will need the involvement of a seasoned commercial lawyer to advise you on your rights, obligations, and remedies. You’ll want to know your full range of options. If all roads lead to litigation, a trial law firm with a successful history of representing stockholders in disputes should be considered.

Minority Stockholders

Disputes involving minority stockholders often involve allegations of being treated unfairly or oppressively and being squeezed or frozen out. A squeeze is an attempt to get the minority shareholder to sell their shares at a low price. In a freeze, the minority shareholder is treated as if he or she no longer exists. As opposed to the 50/50 corporation, this might be seen in the 51/49 entity. Again, a stockholders agreement might control a situation like this, but according to commercial courtroom attorneys, many small, closely held corporations have no such agreement.

Colorado Law on Minority Stockholder Oppression

Colorado has enacted broad legislation for the protection of minority stockholders. Without those protections, minority shareholders could be at the mercy of arbitrary and capricious decisions by the majority stockholder. The rights of all stockholders are protected, particularly those with a minority of stock in a company. Regardless of which side you’re on, you’ll want an attorney or law firm that can invoke and protect your rights.

It isn’t unusual for minority or majority stockholders to file lawsuits against each other. That involves complex litigation and extensive courtroom experience. You will need a lawyer or law firm that understands deadlocks and stockholder lawsuits and how to effectively resolve them or litigate them. Once that lawsuit is filed, your ability to resolve such a dispute on your own diminishes exponentially.


Corporate Law: Why Your Business Needs a Lawyer for Stockholder Disputes 1

Lizzie Weakley

Meet the Author: Lizzie Weakley

Lizzie is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky, Snowball.

Categories

More Posts:

Why You Need to Be Specific When Writing a Will

No one likes to think about death, but it is something that we all have to face at some point in our lives. If you have children, it is especially important to make a will so that you can ensure that they are taken care of after you're gone.  These are a few reasons...

How Does Legal Compensation Work? All You Need to Know

In a life-threatening accident, the victim's family members are entitled to compensation. The guilty party must pay compensation for the loss of life and physical injury if it involves a criminal act (e.g., murder or rape). However, if you're injured in an accident at...

What is Customs Clearance?

When it comes to transporting goods from one country to another, customs clearance is mandatory. It has made customs clearance services indispensable in transport and logistics for businesses in international trade. These professionals will help you navigate complex...

Why Should You Have A Business Lawyer For Your Growing Organization?

Has your business been piling up in terms of paperwork and legal processes? Maybe it's time to accept some help and call the professionals to work their magic. In the 2020s, businesses are being called to be more open about delegating the technical aspects of their...

How to Limit Legal Issues at Your Business

Have you ever run into a legal issue at your business and realized that you were totally unprepared to handle such a situation? Owning a business is already difficult enough without having to deal with legal and financial difficulties. Here are a few tips that will...

Why You Need to Exercise Due Diligence When Lending to Customers

As a lender, you need to exercise due diligence when lending to customers. A due diligence review ensures that the loan does not involve legal risks that you are not aware of that could damage you or your business. Exercising due diligence will help you know your...

Why It’s Important to Comply with All State and Local Regulations

Anyone that has ever been involved in running a business whether it be a startup, or a corporate position knows that there are a lot of state and local regulations to deal with when running a business. It can all be a little overwhelming at times. You might be...

How Your Business Can Minimize Lawsuits

Running a business is full of challenges, and one of the most nerve-wracking is the possibility of a lawsuit. It’s good to know that there are lots of things you can do to minimize the chance of getting a lawsuit.

Online Legal Services – When do they Make Sense?

Law services is an interesting space right now. Traditionally, law services have been extremely pragmatic. Consulting with a lawyer either over the phone or in person has dominated the way we approach legal action. However, the power of the Internet holds no bars, and we have got to a stage where law services are now being digitized by tech companies.

What Every Entrepreneur Needs to Protect Their Business

Most entrepreneurs focus on getting their product to the market and selling it in an effective manner. They believe that the biggest danger will come from lack of sales. Unfortunately, this can leave them open to be blindsided by other matters such as lawsuits and ownership or control issues.

All Categories

Business Operations

Entrepreneur Interviews

Marketing, Networking, & Social Media

Self Care & Personal Development

Working Moms

Business Software and Technology

Entrepreneurship & Small Business

Organizing Tips

Sales

Career Building

Family Businesses

Inspiration

Starting Your Own Business

Work-Life Balance

Communication

Hiring Help

Management & Leadership

Time Management & Priorities

Women in Leadership

Recent Posts

Why Your Business Should Offer HSA-Compatible Health Plans

Why Your Business Should Offer HSA-Compatible Health Plans

As a business owner, you have a lot of responsibilities when it comes to taking care of your employees. If you offer good benefits, such as healthcare, you’ll be more likely to hire and maintain the best employees.  Here are a few reasons why your business should...

When it’s Time to Hire an HR Professional for Your Company

When it’s Time to Hire an HR Professional for Your Company

As your business continues to expand, it might be a wise decision to employ an HR specialist who can help you manage and optimize your workforce. An HR expert brings with them essential services that will streamline the operations of your company while keeping your...

Why Your Office Needs High-Quality Chairs

Why Your Office Needs High-Quality Chairs

For any business or organization, the right office furniture is vital. Quality chairs are essential and can help bolster productivity, decrease employee health issues, and remain operable longer than budget substitutes. Investing in quality office chairs provides...

How to Quickly Capture Attention on Social Media

How to Quickly Capture Attention on Social Media

Social media is invaluable for marketers and business owners, especially those working with small businesses. It’s a great way to get the company in front of more people, allowing you to attract more customers. Of course, it’s not enough to just get seen on social...

Tips for Starting a Gardening Business in Your Community

Tips for Starting a Gardening Business in Your Community

Embarking on a gardening business is a bewildering journey that promises both intrinsic satisfaction and monetary success. The paramount initial step is to scrutinize the varied gamut of services you would want to render, followed by an intricate search for tools and supplies to substantiate the execution of those services. Crafting a business and financial plan is an absolute must, especially given the burgeoning competition from fellow green-thumbed entrepreneurs amidst the backdrop of the COVID-19 pandemic. Establishing an online presence through a website and social media and designing business cards and flyers are integral to drumming up business. Lastly, building a loyal clientele and network is paramount for sustained success in the horticultural realm.

How to Protect Your Personal Finances From Black Swan Events

How to Protect Your Personal Finances From Black Swan Events

Life throws us an occasional curveball; it’s just a part of life. But what if your finances take a hit due to something outside of your control?  Black swan events are rare, but they occur and can cause massive financial losses. The key is to be prepared for the worst...