Shareholder and partnership disputes often arise when those with a financial interest in a business disagree with the decisions being made by those with executive authority. Disputes may also arise if shareholders or partners have cause to doubt that the accounting used to determine investor payments was done accurately or fairly.
Examples of shareholder and partnership disputes include:
- Claims of unfair prejudice, where a minority shareholder alleges that the majority mistreats him, or where a majority shareholder believes a minority shareholder has an improper level of influence
- Disagreements over how to interpret a company’s governing documents such as Shareholder Agreements or Articles of Incorporation, when the rights and responsibilities of shareholders and directors are at issue
- Claims of misrepresentation, when a party wishes to set aside a shareholder or partnership agreement or to recover compensation due to the misrepresentation of other parties to the transaction
- Disputes over accounting, when partners or shareholders and directors cannot agree on the correct amount of money to use or disburse under a company’s governing documents
- Disagreements over the partners’ relative contributions to the business, where one or more partners feel that another is not making his proportionate contribution
- Disputes involving a difficult and uncooperative shareholder who the other shareholders wish to expel from the business in order to resume smooth company operations
Partnerships may be formed with or without a written partnership agreement. When there is no written agreement, or when the written agreement is ambiguous, state law governs the partnership arrangement. Each partner has duties and obligations to the others, and it is upon these duties that partnership dispute cases are premised.
Breach of Fiduciary Duty
One of the more common legal bases for shareholder and partnership disputes is a breach of fiduciary duties. This type of suit alleges that the defendant failed to live up to his obligation to act for the benefit of the business and other partners and shareholders. He may have put his own interest first, or he may have simply failed to act in a prudent and competent manner.