Shareholder Disputes Attorney in Irvine, California

Shares in corporations are purchased and owned by shareholders, who receive a portion of the company's ownership. Many questions show up regarding this topic:

What are the rights of shareholders in the state of California?

What happens when there are legal disputes between the shareholders and the corporations in which they are interested?

How can such disputes be resolved?  

Without answers to these questions, the ramifications can be far-reaching and detrimental to the business's success when conflicts arise within a corporation.

William B. Hanley, Attorney At Law can help shareholders in California resolve shareholder disputes efficiently and effectively.  

Attorney William B. Hanley understands the many details involved in such conflicts. Based in Irvine and serving clients throughout Orange County, Los Angeles, Los Angeles County, San Diego, and San Diego County, he has the experience and knowledge to answer your questions and provide the legal guidance you need. Contact him today to schedule a consultation.  

SHAREHOLDER RIGHTS IN CALIFORNIA

Under California law, safeguards and guidelines are in place to outline the rights of shareholders. According to the California Corporations Code, all shareholders are entitled to the following regardless of their ownership stake or duration: 

• An annual report 

• Bylaws of the company 

• Vote results from company meetings 

These rights are given to any shareholder, regardless of the size of their ownership stake or the length of time they have owned stock. Along with those rights afforded to all shareholders, there are additional things to which individuals are entitled if they own at least five percent of a corporation, including access to shareholder lists, records, and corporate financial information.  

This access is predicated, however, on the shareholder establishing (in writing) a “reasonable relationship” between their interest as a shareholder and their reasons for wanting to inspect the information. 

If the corporation denies these requests or if other issues arise, disputes between the company and its shareholders may develop. 

CAUSES OF SHAREHOLDER DISPUTES

Common causes of shareholder disputes can range from disagreements over management decisions to conflicts regarding financial practices within the corporation. Disputes often arise when shareholders feel that their rights are being overlooked or when the company's executives lack transparency.  

Financial irregularities, such as issues with dividend payments, misuse of company funds, or discrepancies in financial reporting, can also trigger conflicts. Additionally, disputes can result from perceived breaches of fiduciary duty, where shareholders believe that the directors or officers are not acting in the best interest of the company and its stakeholders. 

Other common causes include conflicts over the direction of the company, differences in opinion regarding mergers and acquisitions, and disagreements about the valuation of shares during buyouts or when new shares are issued. Understanding these potential sources of conflict is necessary for addressing and preventing disputes before they escalate further. 

HOW TO RESOLVE SHAREHOLDER DISPUTES 

There are a variety of causes for disputes between co-owners of a company or between the organization and its shareholders, including: 

• A breach of contracts such as shareholder agreements or articles of association. 

• Shareholders not being provided with the company’s most current financial information. 

• Allegations of conflicts of interest between individual shareholders and/or the company. 

• Allegations that any member or shareholder is acting in violation of their fiduciary duty. 

• Disputes between majority and minority shareholders regarding lack of fairness. 

The possibility of these types of disputes can be lessened if proper steps are taken to avoid them. Working with a knowledgeable shareholder disputes attorney can provide guidance to properly draft contracts, partnerships, shareholder agreements, and other documents. If disputes do take place, mediation is the preferred method of seeking a resolution. 

Arbitration and litigation are available avenues to pursue, but these options should be considered last resorts, as they put the outcome in the hands of an outside party. All corporation members (shareholders included) should prioritize the company's best interests and pursue an amicable means of resolving any disputes.  

Having an experienced attorney like Attorney William B. Hanley working on your side—no matter which side of the dispute you may find yourself on—will put you in a strong position to work toward a fair and reasonable outcome. 

FREQUENTLY ASKED QUESTIONS (FAQs) 

How can shareholder disputes be avoided? 

Disputes can be mitigated by ensuring transparency, regular communication, and adherence to company bylaws and shareholder agreements. Drafting clear contracts and having thorough records can help. Consulting with a knowledgeable shareholder disputes attorney can provide guidance and help set up mechanisms to prevent conflicts. 

What should I do if I find myself in a shareholder dispute? 

If you're involved in a shareholder dispute, the first step is to seek legal advice. Contact an experienced shareholder disputes attorney who can guide you through potential resolutions. Mediation is often preferred, but arbitration and litigation may be necessary if an amicable solution cannot be achieved. 

How can a shareholder disputes attorney help? 

A shareholder disputes attorney can provide legal guidance, help draft clear contracts and agreements, and mediate disputes. In cases where disputes cannot be resolved amicably, the attorney can represent your interests in arbitration or litigation, working towards a fair and reasonable outcome. 

Can minority shareholders protect their interests in a dispute? 

Yes, minority shareholders have certain legal rights to protect their interests. These rights include the ability to inspect certain corporate records, challenge unfair practices, and bring derivative lawsuits on behalf of the corporation. Consulting with a knowledgeable attorney can help minority shareholders understand and exercise these rights effectively. 

What is a derivative lawsuit? 

A derivative lawsuit is a legal action brought by a shareholder on behalf of the corporation against third parties, often the corporation's own executives or directors. This type of lawsuit is usually filed when shareholders believe the company has been harmed by actions the board failed to remedy. The goal is to seek redress for the company rather than for the individual shareholder. 

Are verbal agreements between shareholders legally binding? 

While verbal agreements can be legally binding, they are harder to enforce due to the lack of documented proof. To avoid misunderstandings and future disputes, it is advisable to have all shareholder agreements and important decisions documented in writing and reviewed by legal counsel.