Archive for May, 2009
The Special Situation of “Passive” Shareholders
May 19th, 2009 | 
Author: 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, but who are not involved in management or as an employee. Often the existence of passive shareholders in a family owned business means that the “next generation” has inherited from the one before it, and that some family members have chosen, for whatever reason, not to work the family business. Those that do the work often feel that they “deserve” more money than their salary alone provides them, and that those that provide no “sweat equity” are entitled to nothing. This is a litigation just waiting to be filed.
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