How To Navigate Business Partnership And Shareholder Disputes
Our corporate law attorney, Artie Pennington, founded Artie Pennington Law Offices, PLLC, after beginning his career as a business owner, software designer, developer and consultant. Now, he utilizes his personal experience to counsel and advise Texas entrepreneurs, partners, executives and shareholders in business strategies and commercial litigation, including business owner disputes, partnership disputes and shareholder disputes.
Managing And Resolving Partnership Disputes
A business partnership has multiple owners, whose ownership percentage is set forth in the company’s operating agreement. Sometimes, partnerships are designed to distribute ownership equally. Other times, one person may have a majority interest in the partnership. The percentage difference will equate to the percentage of profits each partner will receive. In addition, a majority owner will have the final say in disputes and conflicts.
Common partnership disputes can erupt after a partner takes actions such as:
- Abandoning their roles and duties with respect to the partnership
- Misappropriating or misusing assets or money, including embezzlement
- Breaching their fiduciary duties
- Breaching terms of the operating agreement
- Failing to delegate authority
If you can prove that your partner’s breach of a fiduciary duty or violation of the terms of an operating agreement caused damages and a loss of profits for your partnership, or that your business partner’s actions were negligent, you may have a basis to take legal action in court and file a lawsuit against your business partner.
Protecting The Rights Of Minority Shareholders And Common Causes Of Shareholder Disputes
The owners of a corporate entity that establishes shares of stocks to distribute the ownership of the company are called shareholders. A majority shareholder will own a majority percentage of a company’s shares. A minority shareholder will own less than 50% of the company’s stock shares. Each shareholder has rights. Some shareholder rights can include the right to sell their shares in the corporation, the right to purchase additional shares in a corporation if and when they become available, and voting rights to help make leadership and directional decisions for the business.
Shareholder disputes can develop between shareholders or between shareholders and the owners of the corporation. Some of the shareholder disagreements and disputes can arise out of:
- A breach of the shareholder agreement
- A breach of fiduciary duties
- Disagreements about the corporation’s management, direction, compensation or dividend distribution
- Conflicts of interest and a lack of consideration for minority shareholders
Seeking the advice of corporate legal counsel when a disagreement first arises can help avoid a larger conflict developing down the road. Contracts and agreements are often written to anticipate the future possibility of disagreements. As such, shareholder agreements typically include dispute resolution terms that can help provide direction for disagreements.
Hire Corporate Counsel To Assist With Potential Partnership Or Shareholder Disputes
The sooner an experienced commercial litigation lawyer gets involved in any potential dispute, the more likely it will be to resolve the issues in the best interest of the business. Call our offices in Austin and Kyle at 512-982-1190 or send an email through our firm’s contact form to schedule your free initial consultation today.