Shareholder and Partnership Disputes

Shareholder and partnership disputes can disrupt operations, strain relationships, and put a business’s future at risk. These conflicts may arise between co-owners, minority shareholders and majority stakeholders, or between partners and company leadership. With so much at stake both financially and legally, it’s important to work with legal counsel who can help protect your interests and resolve the dispute efficiently.

Contact Demorest Law, PLLC, for an initial evaluation with a Royal Oak business attorney to discuss your situation and learn how we can help you pursue a resolution that safeguards your rights and keeps your Michigan business on track. We’re pleased to serve businesses in the Detroit metro area, including greater Wayne, Oakland, Macomb, Livingston, Washtenaw, and Monroe counties.

Common Types of Shareholder and Partnership Disputes

At Demorest Law, PLLC, our lawyers have extensive experience advising businesses and their owners on legal disputes that may arise among partners or shareholders. Some of the most common examples of partnership or shareholder disputes include:

Ownership and control disputes, such as disagreements over current equity splits, disputes over voting rights and procedures, or deadlock over strategic decisions or major transactions
Financial disputes, including disagreements over distribution vs. retention of profits, disputes over the necessity of capital calls (or allegations of improper equity dilution), or claimed misappropriation of company assets or self-dealing
Management and operational issues, such as alleged breaches of fiduciary duties or claimed mismanagement of daily operations
Alleged minority owner oppression, including claimed lockouts, denial of information rights, wrongful equity dilution, or forced buyouts at less than fair market value
Exit-related disputes, including disagreements over the enforceability of buy-sell agreements or conflicts over the valuation of an owner’s or partner’s equity

Legal Duties of Shareholders, Directors, and Partners

Partners, controlling shareholders, and corporate directors may owe various legal duties to the business and to its owners. These fiduciary duties may include:

Duty of Loyalty – The duty of loyalty requires fiduciaries to refrain from putting their interests ahead of the business or its owners. A breach of the duty of loyalty may involve engaging in self-dealing, acting under a conflict of interest, or misappropriating the company’s opportunities.
Duty of Care – The duty of care requires a fiduciary to act prudently in managing a business, including exercising reasonable care in decision-making and seeking professional advice when appropriate before acting. Breaching the duty of care may occur when directors fail to seek legal or financial counsel before making operational decisions that lead to losses or liability for the business.
Duty of Good Faith and Fair Dealing – The duty of good faith and fair dealing requires fiduciaries to deal honestly with a company’s owners and to avoid favoritism or retaliation. A fiduciary may breach their duty when they make materially false or misleading statements or attempt to gain an advantage at the expense of other owners.

The Role of Corporate Governance Documents

Resolving shareholder or partnership disputes may depend on the rights and remedies provided by the company’s governance documents. As a result, resolving a disagreement begins by reviewing governance documents such as corporate bylaws, partnership agreements, LLC operating agreements, or shareholders’ agreements. These documents may address critical issues such as voting rights and procedures, management authority, buy-sell provisions, transfer restrictions, or mandatory mediation or arbitration clauses. Understanding parties’ rights and responsibilities under corporate governance documents can help develop a legal strategy to resolve a conflict.

Poorly drafted governance documents can exacerbate shareholder and partnership disputes, as ambiguous or conflicting language can provide parties on both sides with a reasonable basis to advance differing interpretations of governance provisions. Gaps in contractual language may also allow state corporate, partnership, or LLC laws to determine parties’ rights and responsibilities.

Remedies and Resolutions for Royal Oak Partnership Disputes

Business owners and managers may pursue various avenues to resolve corporate governance or financial conflicts within a company. First, parties may negotiate informally to resolve a dispute, avoiding the time and expense of more formal litigation. When informal efforts fail, shareholder or partnership agreements may contain mandatory mediation or arbitration clauses.

When litigation becomes an option for parties to resolve a partnership or shareholder dispute, filing a legal action with the assistance of a lawyer may provide various remedies, such as:

Books and records demand, which allows owners to seek court orders granting access to inspect the company’s financial records and documents of board activity
Accounting actions, which can compel controlling owners or managers to produce documentation of the company’s operational and financial activities
Injunctive relief, which can bar actions that violate corporate governance documents or applicable law
Financial compensation for breaches of partnership/shareholder agreements or fiduciary duties
Appointment of a receiver to assume specific management responsibilities for the business

In cases involving an impasse between partners or co-owners, parties may seek a “business divorce” in the form of a forced buyout (usually under a buy-sell agreement) or a judicial dissolution when carrying on the business becomes impractical or impossible due to a deadlock.

How a Royal Oak Business Attorney Can Help

An attorney from the law firm of Demorest Law, PLLC, can help you seek a fair and favorable resolution to a shareholder or partnership dispute through experienced and dedicated legal counsel. Our experienced lawyers will fight for your rights and interests by:

Thoroughly investigating your case to obtain all relevant documents and information to assess your rights or legal risks
Reviewing corporate governance documents and other evidence
Developing strategic legal guidance based on your legal options under the company’s governance documents and applicable law
Working with experts to track down evidence or to evaluate your financial rights
Explaining potential avenues for you or your business to help you make informed decisions about how to proceed with a dispute
Representing you or your business during settlement negotiations, in mandatory dispute resolution proceedings, or in court if litigation becomes necessary to resolve a partnership or shareholder conflict

Why Choose the Legal Team at Demorest Law, PLLC?

When you face a partnership or shareholder dispute, the legal counsel you choose to represent your interests can give you a better chance at a favorable outcome to your case. Let an experienced litigation attorney from Demorest Law, PLLC, guide you through the complicated legal issues you or your business face in a shareholder or partnership dispute because:

Our law firm works hard to provide clients with the personal attention and dedicated support they need when facing challenging disputes. We frequently advise small- and medium-sized businesses and also have extensive experience counseling large companies in complex legal matters.
Our attorneys will take the time and effort to understand your situation and discuss your needs, concerns, and goals, providing you with specific legal advice and solutions tailored to your case. Our focus on delivering stellar legal counsel has earned us the trust of numerous business clients who regularly return to our law firm for their needs.
Our lawyers strive through their work to uphold our firm’s values of integrity, efficiency, communication, teamwork, and civility, ensuring that each client we represent receives the legal counsel and advocacy they need and deserve.

Contact Our Royal Oak Law Firm Today for Guidance and Advocacy

Disagreements among business partners or between shareholders and the corporation’s controllers or directors can lead to costly, time-consuming legal action that may jeopardize the business’s success and reputation. Having experienced legal counsel can help you seek an efficient outcome to a dispute.

Royal Oak-based Demorest Law, PLLC, works with businesses in the Detroit metro area, including greater Wayne, Oakland, Macomb, Livingston, Washtenaw, and Monroe counties, and throughout Michigan. Contact our law office today for a confidential consultation with a business litigation lawyer. Let’s discuss the details of your or your company’s partner/shareholder dispute and review your options for seeking a fair and favorable resolution.