To protect your safety in response to the threats of COVID-19, we are offering our clients the ability to meet with us in person, via telephone or through video conferencing. Please call our office to discuss your options.

How to prevent shareholder disputes

Business-meeting-shareholder.jpg

No matter the size of your company, legal battles are an inevitable part of running a business. Potential sources of lawsuits include employees, investors and clients. However, this does not mean you have no power of minimizing risk. You can do well by preventing and preparing for litigation.

One of the areas in which you may experience arguments is with shareholders. Dividing up your company can help it grow but also comes with more complexity, as there are more people to please. Make the process easier with these tips.

Understand your roles and rights

Many disputes arise because each party does not fully understand its own role and rights and those of the other party. Confusion over who does what is bound to lead to contention.

Make sure you clearly know what you are responsible for and what duties lie with the other shareholders, as well as each of your rights in the event of conflict.

Recognize common causes of disputes

Lack of understanding is not the only reason for legal battles. Other common sources include the following:

  • The direction the company should go
  • Conflict of interest
  • How to handle debt
  • Performance issues of a director or shareholder
  • Payment of directors and shareholders
  • Sale of the company or a share
  • Breach of contract

Knowing what these pitfalls are is the first step in preventing them from happening.

Draft a solid agreement

Once you are aware of your roles and rights as well as potential problems, address them in your shareholder agreement.

Explicitly state the expectations for each party. Include details on daily business operations and decisions. Formulate the policies and procedures for dealing with disputes, such as votes, mediation or litigation. One of you may even choose to walk away from the business.

The approach can depend on the type of dispute. Have a business law attorney review the contract to ensure its thoroughness and validity.

No Comments

Leave a comment
Comment Information

Request Your Free Telephone Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

This site uses Google's Invisible reCAPTCHA, which is subject to Google's Privacy Policy and Terms of Use.

${site.data.firmName}${SEMFirmNameAlt}

North Office
950 S. Winter Park Dr
Suite 290
Casselberry, FL 32707

Toll Free: 888-681-4389
Casselberry Law Office Map

South Office
BY APPOINTMENT ONLY
14115 Town Loop Blvd #300
Orlando, FL 32837

Toll Free: 888-681-4389
Orlando Law Office Map

At Korshak & Associates, P.A. we love feedback from our clients. Please take a moment and tell us how we’re doing!

Loading...