Common Types of Shareholder Disputes

Jeff Varcadipane

March 30, 2022

Common Types of Shareholder Disputes

In the old days, shareholders used to be people with a lot of money who invested in big company stocks, with most of them being Fortune 500 companies. However, now even small start-up companies are now able to raise capital by selling shares in the company. 

When this happens, those who invest in the company as shareholders have ownership interests in the start-up or corporation – and they often have strong opinions. As in any business involving more than one owner, disputes do arise between the shareholders. At Varcadipane & Pinnisi, PC, we help in resolving this type of issue for clients in New Jersey and New York.

What Constitutes a Shareholder Dispute?

A shareholder dispute can be a disagreement among shareholders of a company, or it can also be a disagreement between one or more shareholders and the owners of the company. These disputes can arise in different situations, and some disputes can be resolved internally while others require alternative dispute resolution or civil litigation.

Common Shareholder Disputes

There are many circumstances that trigger shareholder disputes, but the most common disputes involving shareholders are the following:

  • Breach of contract involving the shareholder agreement
  • Disagreements over the management of the company
  • Disagreements over the company’s overall direction
  • Breach of fiduciary duties by officers of the company
  • Disrespect of minority shareholders
  • Failure to distribute dividends
  • Disparate compensation or distribution of dividends
  • Self-dealing and conflicts of interest
  • Suspected fraudulent or illegal activities

Disputes like these and others are common among shareholders, and a lot is at stake when they arise. It is important to seek legal counsel early on when the dispute arises because an experienced shareholder dispute lawyer can advise you of your legal rights and devise a strategy to have the dispute resolved in your favor.

What a Shareholder Dispute Lawyer Can Do for You

The first thing a shareholder dispute lawyer can do for you is to review your shareholder agreement to determine what avenues are provided for dispute resolution. A shareholder agreement will usually have a provision that provides procedures for the resolution of disputes, including circumstances under which a shareholder can force a sale of their shares if the dispute is not resolved to their satisfaction. If the shareholder agreement does not contain such procedures, then a lawyer should update the agreement as soon as possible to address this matter.

Learn More from a Commercial Litigation Attorney

Our attorneys at Varcadipane & Pinnisi, PC, can guide you through the dispute resolution process, ensure your rights are protected, and seek a resolution of the dispute that is favorable to you. Some of the rights you have as a shareholder include but are not limited to the following:

  • Ability to propose a resolution and have the dispute resolved at a general shareholder meeting
  • Ability to have a neutral director or a neutral professional mediator to resolve the dispute
  • Ability to present a resolution to have the company dissolved if the circumstances so warrant from the shareholder’s perspective.

If you are a party to any type of shareholder dispute, contact our office today for a free consultation.

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