As the economy keeps getting worse, many family-run businesses are finding that conflicts between shareholders that had been brewing beneath the surface for years are finally coming to a head.  The humming economy helped to mask those problems, since there was less of a reason to act on them while everyone was making money. Passive shareholders are those who own an interest in the company, ...

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The headlines about the millions in bonuses paid to AIG executives with our tax dollars have struck a chord with many people.  But for minority shareholders of many small, closely held businesses, this issue has struck a raw nerve because it is reflective of what is going on in their own business.How could the situation at a huge conglomerate like AIG that has taken billions in bailout ...

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In my last posting, I discussed how the current recession could be used by an unscrupulous majority shareholder to hide his embezzlement.  Unfortunately for several clients I have met with in the past couple of months, these words proved prescient.  One shareholder in particular thought she saw herself in that posting and started questioning what was happening with the company.  Of course, she was told that all ...

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Tough economic times can sometimes be used by one’s unscrupulous business partner to mask his fraudulent activities.  In times like these, minority owners who suspect improper activity by the majority should be more vigilant than ever. Often minority shareholders, especially those not intimately involved in the business, simply get used to receiving little financial information about the company.  The attitude often is, there’s no cause for alarm as ...

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Shareholder oppression can take many forms, but one of the most common is terminating a shareholder/employee from his or her employment.  New Jersey case law discusses “oppression” under the applicable statute as a frustration of a shareholder’s “reasonable expectations.”  Terminating one’s employment may satisfy this test. Not every shareholder/employee who is terminated may succeed in making this argument.  However, if a shareholder was one of the founders of the company, ...

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While minority shareholders have considerable rights under New Jersey law, including the right to be free from oppression, this does not mean that majority shareholders may be bullied by minority shareholders who consistently oversteps their bounds. Business owners may recognize the minority shareholder who (1) knows little about the business, yet insists he knows more than those who actually do the work and have the expertise; (2) attempts to dictate the ...

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Many small company owners think they are doing the right thing by planning for the “orderly transition” of ownership from one generation to the next.  Often done on the advice of an estate planning attorney, the sole owner for a generation or more often outright gifts his shares to his children.   If you intend to leave the company without having any further rights, ceding total control to your children, then there may ...

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A smart business owner knows that litigation is never a first option, but circumstances sometimes dictate that it may seem to be your only option.  An analysis of the strengths and weaknesses of your case, compared to the cost of doing nothing, may very well point to bringing an action against your business partner.  However, all too often a plaintiff who believes he has analyzed his case from every angle has forgotten a ...

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 When a minority shareholder has a dispute with his or her business partner, the aggrieved shareholder often intuitively knows that there must be some legal protection for someone in his situation.  He may not know the details – that there is a specific statute that provides protection for someone in just his position – but common sense may lead him to at least suspect that a competent lawyer might be able to obtain ...

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