Shareholder Disputes in closely held corporations are common and often arise from voting deadlocks, financial disagreements, and claims of minority shareholder oppression. New York law provides several legal remedies, including dissolution proceedings, buyouts, and derivative lawsuits. Preventative measures, such as well-drafted shareholder agreements, can…
Advances or capital contributions made to a limited liability company without authorization may be a source of conflict. Using unauthorized advances or capital contributions as a means to exert control may be a breach of fiduciary duty. A well-drawn operating agreement addresses how and when the owners put additional money…
Shareholder disputes in a closely held business threaten the business and personal financial interests of the owner. New Jersey law provides the owners of a closely held corporation with rights and remedies that assure access to information and the financial benefits of ownership. Closely held corporations can use effective planning…
The effective date of an LLC member’s expulsion may be a critical issue in business divorce litigation and may be tied to critical events or the litigation. Courts will look at the facts and circumstances of the case before determining the effective date, but are often guided by the parties’…
An equitable accounting is a cause of action that requires those in control of the finances of a closely held business to account for their use of the money. An accounting a two-stage process. First the controlling party must render an account of how it used the assets of the…
There is no statutory right to receive a distribution of profits from a limited liability company before it dissolves and winds up its affairs. Distributions before then are discretionary. Profit distributions are in the discretion of the majority members or commonly in the discretion of the managers of the limited…
A ‘passive’ member with no rights or responsibilities in the management of a limited liability company cannot be held liable for refusing to participate in a PPP loan application. Dissociated LLC members with no management rights can withhold their voluntary consent to proposed actions. The waiver of fiduciary duties in…
A New Jersey Court conducing the valuation of a business may use any technique or method generally acceptable in the financial community. The application of a minority discount is a question of law, but likely will be based on the factual determinations of the court about the culpability of the…
Accounting firm is compelled to repurchase the equity of departing shareholder who moved practice to competitor firm. A shareholder agreement that is integrated and intended to be the parties’ complete agreement may preclude a claim for breach of corporate by-laws. A shareholder in an accounting firm organized as a professional…
Managers of a limited liability company owe to the company fiduciary duties of loyalty and care, must act in good faith, and refrain from reckless or unlawful conduct. A member who seeks information about a manager-managed limited liability company must state the purpose for the request under the Uniform Limited…