Individuals who decide to start, or to invest in, a company presumably do so because they are on board with the company’s goals and values. As the company evolves in response to market pressures and opportunities or due to other circumstances, this can change. Disputes may arise between the shareholders of a corporation and its directors and officers, or even between minority and majority shareholders. For a limited liability company (LLC), the owners, known as members, may disagree among themselves or, if the LLC is governed by a manager, with the manager.
The attorneys at Beckemeier LeMoine Law are experienced with handling disputes involving businesses of all sizes and constitutions, including corporations, LLCs, and partnerships. We understand the importance of resolving such matters expediently. Relying on our firm understanding of Missouri business law, we will advocate for you and your business and take whatever steps are necessary to resolve the issues you are facing.
There are many different players when it comes to a company. Corporations have corporate officers, which may include a chief executive officer or president, among others, a board of directors, and shareholders. An LLC has members, who own the company, and some LLCs are operated by the members and others by a manager or managers. Each person playing a role has specific duties and responsibilities to the company and to each other. For instance, a company’s board members are expected to fulfill their fiduciary duties by acting in the best interests of the company at all times. If shareholders or members believe that corporate officers are taking actions detrimental to their interests, they might claim that there has been a breach of fiduciary duty.
The scope of fiduciary duties is established within company policies, but officers and directors must adhere to the following:
- Duty of care: make prudent and informed business decisions
- Duty of loyalty: prioritize company interests over personal benefit
- Duty of good faith: conscientiously and fairly carry out fiduciary responsibilities
If these definitions seem broad, it’s because making an exhaustive list of prohibited or required actions is impossible. The complexities of business management are great and the facts and circumstances of any particular business decision have bearing on whether a duty has been breached. Shareholders or members may bring a charge of breach of duty if they don’t have confidence in the manner in which decisions are being made or if they suspect officers are withholding or using information for their own personal gain. Other shareholder or member disputes may involve claims by those with a minority interest that majority interest holders are using their advantage unfairly.
Resolve your fiduciary disputes
The most prudent and informed decision you can make if you are facing fiduciary litigation is to have a reputable St. Louis shareholder litigation attorney at your side to help you navigate these complicated legal matters. Beckemeier LeMoine Law has successfully represented business clients in a variety of shareholder and member disputes, as well as clients seeking help in fiduciary disputes over estate planning and trusts. Our areas of expertise include:
- Breach of fiduciary duties by chief officers of a corporation
- Breach of fiduciary duties by managing officers of a LLC
- Missouri Uniform Trust Code
- Missouri Probate Code
- Violation of fiduciary duties by trustees
- Violation of fiduciary duties by executors
- Removal of trustees or executors
Fiduciary disputes can be stressful because there’s usually a breach of trust involved, whether the parties are family members trying to settle a probate matter or shareholders who suspect the terms of their agreement are not being honored. If you believe your legal rights as a beneficiary have been violated, or if someone has accused you of breach of fiduciary duty, you should speak with legal counsel about your best course of action. The St. Louis shareholder litigation attorneys at Beckemeier LeMoine Law are adept at navigating the complexities of shareholder litigation and will be trustworthy advocates for your legal rights and interests at every step of the process.
Corporate fiduciary duties
Each decision or action that corporate business owners take involves research, consultations with directors, board members, and experts, verifying information, and evaluating potential risks and benefits. Directors and managers are legally obligated to consider how their decisions will affect shareholders and members and must avoid actions that work against the best interests of these beneficiaries.
The charge of breach of fiduciary duty is serious—and often difficult to prove, given the complexities of corporate transactions. Even the most carefully-considered business decision can have a foreseeable negative effect on the company. Therefore, in making determinations in fiduciary duty cases, it applies the following standards of review:
- Business judgment rule: presumption that directors’ actions were informed and made in good faith, in the best interests of the company
- Enhanced scrutiny: was the transaction reasonable and made in the best interest of beneficiaries?
- Entire fairness: are the results of the transaction fair to the beneficiaries?
While the business judgment rule offers directors protection against baseless lawsuits, they can be held personally liable if the court is not convinced the transaction was made in good faith, or it finds a clear conflict of interest or evidence of negligence. In those cases, the other standards of review can be applied.
Resolving issues between stakeholders and businesses
Ultimately, the directors and managers of a company and the shareholders or members generally want the same thing—to ensure that the company is structurally and financially sound, that it is successfully meeting its objectives, and that their investments in the company are protected. Disagreements inevitably occur over how to best fulfill all these goals, from criticism of operations management to differences in opinion about the growth plans. In more serious cases, where minority shareholders believe an action was taken imprudently or without the company’s best interest at heart, they might accuse the directors or majority shareholders of a breach of fiduciary duties.
When a shareholder or member dispute arises, Beckemeier LeMoine Law is ready to help your company negotiate a fair and reasonable agreement that satisfies all parties. If this is not possible, our St. Louis shareholder dispute attorneys are ready to fight for you in the courtroom. Ideally, your company should have procedures in place to help resolve such conflicts before they escalate and the attorneys at Beckemeier LeMoine Law are also experienced with creating and documenting such procedures. With in-depth knowledge of all aspects of Missouri business law and extensive business litigation experience, our firm understands what is needed to meet the challenges of litigating shareholder disputes and reaching a favorable outcome for you and your company.
We are ready to sit down with you to discuss your situation and the attorneys on our team will answer any questions you have and offer a realistic assessment of your options. Contact us at 314-965-2277 to request a consultation.