Shareholder, corporate governance and valuation disputes can be life threatening events for closely held businesses, endangering the equity that shareholders have built over many years of hard work.
Matters handled range from compensation disputes in professional corporations to dissenters' rights cases involving hundreds of millions of dollars. These include many of the most prominent and precedent-setting shareholder lawsuits of the past 20 years.
We represent clients in three principal areas:
Corporate governance disputes
Corporations, directors and shareholders may become embroiled in disputes regarding the leadership, day-to-day management or direction of their company. Boards find themselves deadlocked and shareholder agreements are sometimes breached. It is crucial that shareholders and directors entangled in such disputes fully understand both their rights and potential exposure.
Careful analysis and planning can help avoid these disputes. When disputes prove unavoidable, they should be addressed promptly to ensure the most favorable outcome and to avoid the unintended creation of rights and significant legal remedies.
Minority shareholder litigation
Minority shareholder litigation has exploded as shareholders have come to realize that the courts are providing them with relief not available until recent years. This is particularly true in Minnesota where the legislature and courts have taken aggressive steps to protect the reasonable expectations of owners of closely held businesses.
Minority shareholders may obtain relief from controlling shareholders and their companies on proof of:
- Shareholder oppression
- Shareholder termination/demotion
- Breaches of fiduciary duty
- Self-dealing
- Excessive compensation
- Failure to declare proper dividends
- Mismanagement
- Squeezeouts
- Misrepresentations
- Businesses and controlling shareholders might seek relief from wrongdoing by minority shareholders, including unlawful competition by departing shareholders
It is our experience that formulating proper initial strategy is crucial to obtaining favorable outcomes and, often, to avoiding lawsuits altogether.
Prosecution and defense of shareholder lawsuits, as well as the design of the most favorable solutions, often involves the expertise of lawyers from across Lindquist & Vennum’s many practice groups. In representing clients in these complex matters, we often draw upon the expertise of our colleagues practicing in areas of employment law, corporate finance, tax, securities, intellectual property and employee compensation, as well as the extensive industry specific expertise of our more than 150 lawyers.
Valuation disputes
Minnesota law provides a number of circumstances under which shareholders are entitled to the mandatory redemption of their shares at "fair value."
We have extensive experience guiding both corporations and shareholders through these disputes.
Optimal results in these cases requires the use of the proper experts and expertise. Whether the equity in dispute is large or small, we help clients ensure that the valuation process works to their greatest possible advantage.