Written By: Joseph J. Nardulli
Disputes of many types and varieties can and do develop among individuals operating, managing and investing in corporations and other types of business entities. These internal disputes frequently involve struggles to control the operation of the present business operations or the future of the company. Such corporate disputes can be further fueled by shareholders or members of the business entity whose positions are at odds with the current management of the business entity.
Corporate disputes can become so serious that the members of a corporation’s board of directors become deadlocked and cannot function as a board. When such a deadlock arises, the appointment of a provisional director or even a receiver may be needed in order for the corporation to continue to operate productively and profitably for the benefit of its shareholders.
In addition, corporate officers and directors have fiduciary duties to the corporation and its shareholders which are imposed on them by law. Engaging self-dealing or otherwise using corporate opportunities for their own benefit, rather than for the benefit of the corporation and its shareholders, or engaging in other acts of dishonesty, fraud or gross abuse of authority as an officer or director of the corporation, may likely result in the need to remove the officer or director from his or her position in the corporation, for an injunction to stop the officer or director from engaging in such wrongful acts, and for monetary damages for any harm suffered by the corporation as a result of the wrongful acts.
Sometimes the removal of an officer or director can be accomplished internally by decisions of the members of the board of directors or shareholders; however, oftentimes, an even number of board members, or an insufficient number of shareholder votes, will prevent change from occurring without litigation. If litigation is needed, an efficient and effective plan of resolution is especially important. Frequently, the most troublesome part of the conflict can be stabilized through immediate or ex parte relief, so that the corporation can be put on a more even keel early during in the litigation process and the corporate dispute can then be addressed in a more assured manner.
Whatever form the corporate dispute takes, a thorough understanding of the law governing corporations and the various tools available to resolve disputes among the corporation’s management personnel, shareholders and even third-parties such as the corporation’s creditors, is key to resolving the corporate dispute in a positive and efficient manner. Retaining a law firm, such as The Wolf Firm, whose attorneys are experienced in handling corporate disputes can be the most important step taken in attempting to achieve a favorable resolution of the dispute.