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Some common types of shareholder-related business litigation

On Behalf of | Mar 28, 2021 | Business Litigation

A common type of New York business litigation involves shareholder disputes. Five types of shareholder disputes form the basis of business litigation with some regularity:

  • A breach of a shareholders agreement
  • A dispute over the direction of company
  • Fiduciary misdeeds by management
  • Minority shareholder rights
  • Compensation dispute

Breach of shareholder agreement

A common type of business litigation involves an alleged breach of a shareholder agreement. A prime example is a shareholder desiring to sell shares in contravention of the terms of the agreement.

Dispute over the direction of the company

Disputes over the direction of an enterprise are also commonplace examples of shareholder-related business litigation. These are particularly common in closely held corporations but occur in larger companies as well. Disputes of this nature can range from a controversy associated with overall strategic plan of a company to the termination of a key employee.

Fiduciary duty breaches by management

Shareholder litigation occurs with some frequency when the matter at hand is fiduciary misdeeds by management. In other words, management has operated in a manner that violates the fiduciary duty owed to protect the interests of the company’s shareholders.

Minority shareholder rights

Shareholders who lack a controlling interest in a corporation have rights. The asserting of these minority shareholder rights occur with some regularity in business litigation.

Compensation disputes

Disputes associated with executive compensation sometimes end up in litigation. This is often grounded on a claim that corporate assets are being wasted through excessive payments rather than being used to grow the company.