Partnership and Shareholder Disputes

Many businesses are owned by more than one person. Even privately owned businesses can be owned or managed by dozens, hundreds, or even thousands of people. Naturally, disagreements arise in connection with the operation of a business; however, allegations of oppressive or unlawful conduct can lead to bitter litigation between owners, partners, or shareholders—putting the future, expansion, control, or even dissolution of a business into question.

New Mexico Partnership and Shareholder Disputes Lawyers in Santa Fe

Partnership and shareholder disputes can be devastating to a business. If a major dispute is not resolved quickly and carefully, it can cause damage to the business and can, in some cases, require the remaining partners or shareholders to dissolve the business altogether. When it comes to partnership and shareholder disputes, the types of disputes and their gravity can vary depending on a wide variety of factors. At the same time, there are multiple options that may be available to resolve a partnership or shareholder dispute, and it will be essential to seek advice from an experienced New Mexico partnership and shareholder dispute lawyer who can assist you.

What are Shareholder and Partnership Disputes?

Partnership and shareholder disputes, as well as member disputes, are terms that all refer to disputes between or among business owners. In other words, these terms refer to disputes that arise between two or more owners of a business. The way in which the dispute is identified—as a partnership dispute, shareholder dispute, or member dispute—will depend upon the type of business structure.

Partnerships, which include limited partnerships (LPs), described business owners as “partners.” A partnership is made up of two or more people who own the business together. Accordingly, a partnership dispute refers to a dispute between two or more business owners in a partnership. Corporations, which can be structured as C-corps or S-corps, are owned in a way by shareholders, who own securities associated with the corporation. Although shareholders do not have the ability to make major changes to a corporation—those decisions are left to the board of directors—shareholders do own a stake in the corporation. Accordingly, a shareholder dispute is a term that refers to a business dispute between or among shareholders. Finally, you might also hear about a member dispute, or a limited liability company dispute. While partnerships describe owners as partners and corporations describe the people who own portions of the business as shareholders, limited liability companies (LLCs) describe owners as “members.” As such, a member dispute is a dispute that arises among business owners of an LLC.

Most Common Causes of Disputes between Partners and Shareholders

There are many causes for business disputes, and these disputes often involve a violation of the existing partnership or shareholder agreement, or a violation of the bylaws of a corporation. More specifically, some of the most common causes of partnership and shareholder disputes include but are not limited to:

• Breach of contract (or breach of partnership or shareholder agreement), which can include disputes over compensation, profit allocation, ownership interests in the business, and other issues;
• Breach of fiduciary duty, which can include a breach of fiduciary duty to minority shareholders;
• Fraud, which may include fraudulent conveyances, misappropriation of trade secrets, or embezzlement, for example;
• Tortious interference, which concerns unfair competition issues; and
• Claims of unjust enrichment when one or more partners or shareholders benefit unjustly at the expense of other partners or shareholders.

Options for Resolving Disputes Between Partners and Shareholders

Depending upon the nature of the dispute and the particular facts of the case, it may be possible to resolve a partnership or shareholder dispute through a form of alternative dispute resolution (ADR), or it may be necessary to file a civil lawsuit and go through the litigation process. No matter what option you decide on to resolve a shareholder or partnership dispute, you should know that our partnership and shareholder dispute attorneys in New Mexico are here to assist you.

The following are common options for resolving business disputes:

• Arbitration (which is one form of ADR);
• Mediation (which is another form of ADR); and
• Litigation, or filing a civil lawsuit to seek damages or another form of remedy.

Avoiding Costly Partnership and Shareholder Disputes

While it may not be possible to avoid all business disputes, you can take steps to avoid costly partnership and shareholder litigation by doing the following:

• Working with a lawyer to draft your partnership agreement, shareholder agreement, and/or company bylaws, ensuring that all essential documents for the business address potential disputes and methods of resolution;
• Seeking advice from a lawyer as you draft any business contract; and
• Planning for worst-case-scenarios with an experienced business dispute lawyer.

Contact an Experienced New Mexico Partnership and Shareholder Disputes Attorney

When partners or shareholders in any business become involved in a dispute, it is critical to begin working with an experienced New Mexico partnership and shareholder disputes lawyer as soon as possible. Our dedicated attorneys can discuss options for resolving an existing partnership or shareholder dispute, and we can also work with your business to prevent partnership and shareholder disputes in the future. Contact Slate Stern Law to learn more about the services we provide to businesses in New Mexico.

Additional Partnership and Shareholder Disputes Information