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Family Shareholder Disputes

Family businesses can be nuanced in comparison with other non-family businesses because family members are often stakeholders who own direct shares with the company itself. Family members have been investing their reputation and entire lives to the success and function of a company. When family members want a say in decisions that may or may not be laid out in a contract, it can lead to trouble and get personal. Therefore, it is wise even with family to bring in another party like an attorney who is impartial to provide another perspective and represent you and the business’ best interests.

Family Shareholder Disputes Attorney in Miami, FL

Sadly, arguments over money or business can ruin families; however, that should never be the case. If you are involved in a shareholder dispute with family, there are ways to resolve the matter while keeping the family relationships intact. Contact a complex business litigation attorney to resolve the dispute.

Our attorneys at Abrams Justice are a proud family business that understands the intricacies of working with family members. When you meet with our attorneys, we can assure you, we are rooting for the ultimate success of your business, while also looking to preserve important family relationships. We will explore all legal options available to you.

We work with clients in the cities of Miami, Homestead, Hialeah, Coral Gables, Miami Gardens, and more. Call for a consultation at (305) 709-0880.

Family Shareholder Disputes Information Center

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What is a Family Shareholder Dispute?

Families begin business relations for various reasons, including mutual interest in starting a business with shared capital between members or inheriting family corporations and having an obligation to keep them going. A family shareholder dispute is a dispute held between family members owning the same number or a different number of shares within a company or those owning shares in a family business without having any personal relationships with the family. Just like any other business, shareholders get specific rights to make decisions regarding the company and their personal equity shares. However, with family dynamics at play in a family business, you have different family members attempting to make decisions that either fall outside of their roles or they were not laid out in a contract or are irrelevant or not in line with the current business model and integrity of the company. Disputes can involve the sale, purchase, or other major decision making over a product, service, person, or capital existing out of business.

Within shareholder disputes in a family dynamic, you may have a couple of contenders involved in an argument, including the following:

The main people involved in shareholder disputes are the familial shareholders that are often at odds with how to run and manage the business.

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Types of Disputes Laid out in Law

Breach of Fiduciary Duty 

A fiduciary duty, can be expressed through a written contract or agreement, and is also an ethical duty formed between a fiduciary relationship, in which the parties must act in the highest interest of the other above anything else. Shareholders must always maintain a communicative and trusting relationship with each other for the sake of the business. In a family business in which family is the base of the company, whether they are shareholders or not, family employees or founders are most likely taken into account when it comes to the decision-making of the business.

However, one shareholder may encounter a situation that makes him or her question the trust and loyalty of the other shareholders, which can then lead to a family dispute. Family shareholders disputing over a breach of fiduciary duties can be difficult because personal inclinations about the established fiduciary duties are common between family members. Family members may feel their behavior is excused or unexcused due to the family relationship component existing out of the business relationship.

Shareholder Oppression 

Minority shareholders are shareholders who may have less ownership than significant shareholders. A minority shareholder may feel like he or she is not being regarded in any decision-making in the company solely based on the fact that he or she is a minority shareholder. In a family business, minority shareholders maybe those that not only hold minor shares, but they also are not as personally invested in the family business as others. The major shareholders may hold the fact against minor shareholders, especially if the major shareholders are actively involved in the business. When a major business decision is considered, the major shareholders may disregard the opinion of the minor shareholders; however, they too feel like they should have somewhat of a say into the decision-making.

Breach of Contract 

A breach of contract dispute is the same as any breach of contract, except it exists out of a family business. If shareholders have established terms over ownership and participation in company decisions inside a contract, they can refer to the contract to claim a violation or breach thereof.

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Approaches to Settle Dispute

The approaches to settle a dispute arising out of a family of shareholders or shareholders in a family business can involve a neutral third-party mediator or arbitrator. However, when the dispute gets out of hand, litigation may be the only option left, in which case each party must have his or her attorney represent his or her own best interests regardless of the party’s relationship.

Common lawsuits existing in shareholder disputes can include the following:

Shareholder Derivate Suit 

A shareholder derivate suit is an action that is between shareholders regarding a third party. Usually, the conflict exists out of mismanagement or abuse of power held by the people in charge. As seen in the family business model, shareholders of a family business may not always be either family or work in the business. However, major and minor shareholders may be worried about the business committing some illegal or faulty action within the business concerning a third-party. In such a scenario, shareholders can take the matter into their own hands and file a lawsuit on behalf of the company. For example, the son of the founder of the business mismanaged the company’s funds, and now the business is facing thousands in debt. The shareholders may file an action against the founder’s son to recover the money.

Direct Suit         

One shareholder against another shareholder forms a direct suit because he or she has suffered some damage in connection to the business. A shareholder may file a lawsuit related to the dividends or rights over his shares, either stated in a written contract or an agreement.

Breach of Contract Lawsuit 

In a breach of contract lawsuit, you are suing another individual for violating the terms and duties stated within the contract. With a breach of contract lawsuit, you can resolve to receive the losses incurred by the breach of contract or seek to rescind the contract entirely.

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Additional Resources

U.S. Securities and Exchange Commission | Investor Information — The U.S. Securities and Exchange Commission website provides educational information for the established business owner. You can find anything from business blogs talking about family business dynamics or cautions to take when having shareholders as part of your business.

Florida Bar | Exploring Shareholding Laws in Florida – The Florida Bar provides additional information regarding shareholders, both major and minor in business. The Florida Bar page can further go in-depth about Florida laws concerning a verity of issues found within shareholders in a family business.

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Miami-Dade Lawyer for Family Shareholder Disputes

When shareholder disputes take place, not only does it hurt the parties involved in the conflict, but also the future and integrity of the business. Business disputes often encompass personal feelings while ignoring the focus of the company. In cases of family shareholder disputes, it can be difficult to put personal feelings aside to solve the issue at hand. Instead, you should contact a professional to represent your interests in the company and reach an agreement with the other parties.

Our attorneys at Abrams Justice Trial Attorneys are dedicated to helping your business flourish while resolving any unintended issues with the least damaging impact on your business. Let us negotiate on your terms with the other parties in the suit.

You can reach us at (305) 709-0880 for a confidential consultation. Our attorneys work with clients in the counties of Miami-Dade and its surrounding cities.