Shareholder Litigation and Disputes

Typically, disagreements among shareholders are focused on issues of control of a corporation. However, disputes may arise for a number of reasons. John McDuff has over 20 years of experience handling shareholder litigation cases involving matters such as:


Shareholder Disputes Involving the Right of First Refusal

A disagreement may arise when one shareholder wants to sell out and another claims “rights of first refusal” based on a shareholders’ agreement. According to the right of first refusal, existing shareholders who wish to sell their shares must first offer the shares to other existing shareholders on a pro rata basis. This allows existing shareholders to continue to control their stake in the corporation, and prevents shares from being sold to an outside third party.

It is possible that another shareholder in your corporation has already retained a lawyer who is analyzing your shareholders’ agreement searching for ambiguities and loopholes that may create favorable conditions for the action that he or she wants to take in opposition to your interests.

Non-payment of Dividends

Perhaps you are considering suing your corporation for wrongs committed by the corporation against you. For example, if you as minority owner in a highly profitable closely held business may have been denied proper dividend payments. Did the majority shareholders siphon off profits in excessive salaries for themselves? Perhaps in order to avoid paying dividends to all shareholders? You may be considering the advisability of suing the corporation for the amount of dividends that you should have been paid, and/or suing the controlling owner who took the profits.

Shareholder Derivative Action

You may be planning what is known as a derivative action, suing one or more shareholders or third parties on behalf of the corporation itself. The third parties might be suppliers, customers, directors or officers. Any legal claim that the corporation has against an individual or entity may be material for a derivative action. If you are successful, the corporation will pay your legal fees.

Shareholder Dispute in Austin? Contact Our Law Firm.

I am business attorney, John McDuff. The quality of my work as a lawyer is well recognized by my clients & I have received the AV rating* under Martindale-Hubbell’s peer review rating system. My clients are predominantly from Austin, Travis County and Central Texas. Call 512-457-1177 to schedule an appointment regarding shareholder litigation. Learn your rights and discuss your options, regardless of whether you will be in the role of plaintiff or defendant.

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The information that you obtain at this site is not, nor is it intended to be, legal advice, and any use of this information will not create an attorney-client relationship. We invite you to contact us to get advice.