Ownership of a company can be divided among multiple individuals through the selling of shares of stock. Anyone who owns stock in a company is a partial owner, known as a shareholder. In some businesses, a handful of people own most or all of the stock, while in others there may be hundreds or even thousands of shareholders. In a business partnership, the partners are the shareholders.
Disputes can arise among shareholders or between shareholders and a company. While shareholder agreements are designed to outline the role of shareholders in a business, sometimes these agreements are not as detailed as they should be, or an agreement may be outdated. If you are involved in a shareholder dispute and are seeking legal assistance, contact the Orange County shareholder dispute attorneys of Daily Aljian today by calling 949-861-2524.
Causes of Shareholder Disputes
Shareholders or partners can become deadlocked in disagreement for a variety of reasons. A shareholder vote in a corporation may lead to a stalemate, or a rare or unexpected circumstance may arise that is not properly outlined in a company’s by-laws. The fate of shares of stock may be contested if a shareholder:
- Becomes disabled
- Files for divorce
- Files for bankruptcy
- Leaves the company
Another common dispute occurs when parties disagree on the value of shares of stock. A valuation formula may improperly overestimate or underestimate the value of stock, causing the shareholders or the company to lose profits.
Resolving Shareholder Disputes
A prolonged shareholder dispute can have a serious negative impact on a company, hampering day to day operations and possibly harming the reputation of the company. It is therefore important to resolve shareholder disputes quickly and decisively. If an agreement cannot be reached, it may be necessary to enter into litigation to protect the interests of the company and its shareholders.
If you are involved in a shareholder dispute, we are prepared to help. Contact the Orange County business attorneys of Daily Aljian at 949-861-2524 to discuss your legal options.