Unfortunately, many complex legal questions can arise when there is a conflict between shareholders and a company and amongst partners in that company. When there are multiple parties attempting to work together to steer the direction of a company, legal conflicts and disputes are bound to emerge.
Litigation for Partnership and Shareholder Disputes
Everyone involved in a situation likely has an opinion about the most appropriate steps to take next regarding any business method or a new concept, and the opinions presented by the relevant stakeholders can conflict with one another. When disputes between the company’s management and shareholders happen, sometimes legal action must be taken in order to settle the dispute. Other methods may have been attempted to resolve the problem without going to litigation but unfortunately, some problems are so complex that they require the insight of an experienced litigator to handle shareholder and partnership disputes.
How Disputes Emerge
When shareholders are active regarding their input for the company, this may lead to a greater chance of a dispute between partners and shareholders. In the worst case scenarios, this can lead to deadlock. Attempts to resolve things outside of court may fail and compromise the company entirely, which is why the company may explore litigation for partnership and shareholder disputes.
Common Shareholder and Partnership Disputes
Partnership and shareholder disputes do not affect just one industry or kind of company.
Shareholder and partnership disputes can arise in many different ways but it is essential to give them proper attention as soon as possible in order to mitigate any possible damage to the company. Time spent away from working on company issues can lead to detrimental impacts on the company as well as distracted partners. There are many different kinds of disputes that can emerge, involving contracts, customers or any of the other essential parts of the business. What follows are some of the most common shareholder and partnership disputes that a business may experience:
- Management deadlocks. Where company management is unable to move forward on decisions without using litigation to break through the gridlock
- Buy-sell agreements. When assets are being sold that belong to the company or when it is time to purchase new assets. This is one of the most common situations in which partners may disagree with shareholders over the appropriate next step.
- Breach of contract. A contractual breach may require enhanced involvement by an attorney in the form of shareholder and partnership litigation to resolve. One party may allege that the other has breached the contract and that other party may allege there was no breach or that it was the first party who breached the contract.
- Succession planning. The future of the company can present many complicated and challenging questions for a business and succession planning issues are most likely to emerge in family owned businesses but they can affect any company.
- Corporate regulation violations. If partners or shareholders act in any way that is in violation of company bylaws, it may require litigation to resolve these issues.
- Executive compensation. One of the most common reasons for a disagreement to emerge between shareholders and partners has to do with compensation for key management individuals.
Resolving Shareholder and Partnership Disputes
When a dispute first emerges, relevant parties may attempt to settle it on their own. Unfortunately, there are many reasons why a dispute cannot be handled effectively outside of court. When it becomes clear that litigation is necessary, retaining the right law firm is extremely important.
If business management and shareholders have attempted to come to an agreement on their own but been unable to resolve the legal issues, this may require the insight of an attorney to help mediate or litigate the situation. It is worth trying to resolve this issue outside of court if possible, but unfortunately many of the issues involved in a complex partnership or shareholder dispute will require going to litigation. In this situation it is essential to hire an attorney and law firm with experience in litigating these complicated and essential disputes.
Handling the dispute effectively and efficiently is critical so as to minimize the impact on the business and allow all vested parties to address the issue promptly. As soon as a legal issue emerges that cannot be properly addressed by management on its own, it is worthwhile to reach out to an experienced attorney immediately.
Has a dispute emerged between shareholders and partners and the conflict is gridlocked? If so, you need to take action right away and work with a law firm of attorneys who understand these complex business issues. Contact KPPB LAW for more information on litigation for partnership and shareholder disputes.