Written By: Joseph J. Nardulli
Whatever form the dispute takes, a well-drafted shareholders’ agreement is oftentimes the most important means of defining and limiting a shareholder’s rights and obligations. However, even if no shareholder agreement exists or if it does not apply to the situation, a carefully planned and focused strategy, combined with a thorough understanding of the legal tools available to resolve the dispute, can be the difference between the success or failure of any litigation involving the prosecution or defense of shareholder’s lawsuit.
To remedy a shareholder dispute, a derivative action can be brought on behalf of one or more minority shareholders against the majority shareholders and/or the management of the corporation when the minority shareholders are treated unfairly resulting in breaches of fiduciary duties to the minority shareholders. In addition, when appropriate and authorized by law, provisional directors can be appointed to the corporation’s board of directors to break deadlocks among shareholders, receivers can be appointed to take over the management and operation of the corporation, and even dissolution of the corporation can be obtained in certain instances.
Corporations of all sizes are subject to shareholder disputes, and the effects of such disputes can be wide-ranging — from a small snag in the corporation’s productivity to the complete demise of the corporation. Although the specific remedies available to resolve a shareholder dispute will depend on the individual facts and circumstances of each case, what is certain is that retaining a law firm, such as The Wolf Firm, whose attorneys are experienced in handling shareholder disputes is an important initial step in attempting to achieve a favorable resolution of the dispute.