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 ...

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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 ...

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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 ...

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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 ...

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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 ...

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Problems among shareholders often could have been avoided had they simply signed a better shareholder agreement at the outset of the relationship.  When shareholders want a “divorce,” they often look to the shareholders agreement to define their respective rights and obligations.  Far too often, when I ask clients what their shareholders’ agreement says about buying out the other, or being bought out themselves, they have no idea ...

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For a minority shareholder who is being treated unfairly by the majority, mere discussions and negotiations with the majority shareholder(s) about the unfair conduct frequently do not resolve things.  Too often, it would seem that one has no choice but to resort to litigation. But litigation is expensive.  As a business-person, you know that just about anything involving an attorney is expensive.  But litigation can be especially so.  ...

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Shareholders engaged in a dispute or disagreement with their business partners may attempt to negotiate their own buy-out in resolution of the grievance. However, all too often shareholders in New Jersey improperly assess the value of their shares, usually leading them to accept less than their shares are really worth, and sometimes far less than he or she would have recovered in a lawsuit. There are several steps to avoid, and several that should ...

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Minority and majority shareholders alike may learn valuable information from reading your company’s financial statements on a regular basis. Your financial statements are not just for the accountants and auditors. They can be a great source of information to help you run your business, big or small. Comparative financial statements reflect current period information for the month or year along with the information for the same period of the prior year. This allows us to compare ...

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When you suspect that your New Jersey business “partners‿ may have committed fraud, either on someone else or upon you, what steps should you take, and what remedies might you have? In New Jersey, certain steps often must be taken as quickly as possible, including retaining a forensic accountant who has experience in uncovering fraud and testifying in court. And certain pitfalls must absolutely be avoided. When a minority shareholder suspects that ...

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