Shareholder Oppression: It’s Always a Risk
A wielding of power by any person or group who controls a corporation may serve to destroy a stockholder’s vital interests and expectations. As …
Shareholder Oppression Under New Jersey Law
Let’s discuss legal remedies for oppressive conduct against members of closely-held New Jersey companies. The shareholder oppression doctrine is a statutory and case law …
Who Can Form a New Jersey Limited Liability Company and What Must Be Included in Its Certificate of Formation?
Like many other states, New Jersey has adopted the Revised Uniform Limited Liability Company Act. To form an LLC under N.J.S.A. § 42:2C-18, New …
Have I Been Oppressed by the Majority Shareholders?
Minority shareholders in small, closely held corporations (under 25 shareholders) can be frozen out of discussions regarding the company’s future by the majority shareholders, …
Piercing the Corporate Veil – When Could It Happen?
Normally, as an owner or shareholder of a corporation, LLC, or partnership, you are not personally liable for the actions for the entity. The …
Income Derived from Personal Businesses Must Be Counted for Eligibility for Benefits
When applying for welfare through a county’s Board of Social Services, whether it’s Medicaid or SNAP benefits, you are required to provide to the …
Is There a Legal Remedy to a Minority Shareholder Without a Finding of Shareholder Oppression?
I’ve written extensively about minority shareholder oppression. Sometimes there is abusive and unfair conduct by a co-shareholder(s) that do(es) not legally qualify as shareholder …
Seven Ways You Can Legally Terminate an LLC in New Jersey
Like a corporation, a limited liability company (LLC) can be terminated either voluntarily or involuntarily with or without the assistance of the courts. When …
How Can Trademark Rights Protect and Strengthen My Brand?
If I operate a business, do I automatically have a trademark? What is the little circled “R” on certain brand names? What does it …
Can an Employer Sue Its Employee for Negligence?
One of our corporate clients had an employee whose negligence resulted in him cutting electric lines to mobile homes, costing the company $3,500.00 to …
Understanding the Nature of Limited Liability Companies Under New Jersey Law
A limited liability company is no longer a new creation in business organizations law. The LLC was originally designed to answer the need for …
Be Careful When You Personally Guarantee a Contract
A contractual guarantee agreement means if a contract is breached and payment not made, the person who guaranteed the contract can be held personally …
Your Reason for Signing a Contract Can’t Be Used Against You
“Every contract in New Jersey contains an implied covenant of good faith and fair dealing.” “The party claiming a breach of the covenant of …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Price/Book Value
Most commonly, Buy-Sell agreements provide for a purchase of shares based on book value. Book value is the difference in value between the assets …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Buy-Out Mechanisms and Their Limitations
The most useful mechanism in a shareholder agreement for dealing with shareholder oppression is a well-written Buy-Sell provision. Because shareholders in closely-held corporations have …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Required Dividends
The most straight-forward way of protecting a minority shareholder’s economic stake in a closely-held corporation is to require the payment of dividends. In most …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Employment Agreements
A primary claim for shareholder oppression is termination of employment. “A minority shareholder’s loss of employment within a closely held corporation can be particularly …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Adopting the Supermajority Voting Requirement
A strategy for providing some minority shareholder control is to alter the voting requirements for specific decisions to require supermajorities — either on the …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Establishing Classes of Shares to Protecting Minority Shareholders
A tool for maintaining a minority shareholder’s ability to have some control over the corporation is to issue different classes or series of shares …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Voting Agreements
Shareholders may bind themselves in a shareholder agreement to vote in a specified manner regarding specific matters. Examples might include places on the board …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Cumulative Voting
Cumulative voting is a mechanism for granting minority shareholders rights of participation to corporate decisions. However, this protection is quite limited and may, at …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Guaranteed Directorships to a Minority Member
Minority shareholders usually do not have the voting power to guaranty a spot on the board of directors. A shareholder who is not a …
Shareholder Agreements Can Address Specific Oppressive Conduct and Their Limitations
Minority shareholders in a closely-held corporation may (should) try to protect themselves against the actions of the majority by including protective provisions in their …
Once You Agree to Settle a Lawsuit, New Jersey Law Will Not Let You Back Out of the Settlement
In many (most cases/lawsuits) the parties settle their dispute. There is strong public policy favoring settlement of litigation. Once a case is settled, New …
Recent NJ Cases Involving Shareholder Agreements Offer Much Guidance to Counsel and Clients – Part 2 of 2
Facts of the Case This case involved a closely-held corporation with four equal shareholders, in which three of the shareholders ceased paying salary to …
Recent NJ Cases Involving Shareholder Agreements Offer Much Guidance to Counsel and Clients – Part 1 of 2
Case 1 I’ve written often about the importance of having legal disputes resolved by the courts in NJ. Our law states that “Subject to …
Knowing Your Options for Getting Out of a Business with a Member You Are Not Getting Along With
The first, and in my opinion, best option is for you to formally withdraw from the LLC. If you do not have a written …
Corporations Located Outside NJ Can Still Be Sued in New Jersey, Sometimes
In order to exercise jurisdiction over an out-of-state corporation, “a defendant’s “conduct” must create a substantial connection with New Jersey. When analyzing a defendant’s …
Suspect Infringement of Your Business Trade Name? Take Action Now!
If you have gone through the effort of undertaking a United States Patent Trade Office (USPTO) filing, confirmed your company holds the registration to …
New Jersey’s Business Courts: Litigation Program
The New Jersey Supreme Court implemented a statewide Complex Business Litigation Program, the purpose of which was to address the specific needs of parties …