Shareholder Disputes Attorney in Las Vegas, NV

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Las Vegas Shareholder Disputes Attorney

Shareholders play an integral role in the financial, operational, governance, and control aspects of a business. Since shareholders are de facto part-owners of a company, they enjoy certain rights and privileges as it relates to the endeavors of a business. Unfortunately, when there is a difference in vision or disagreement among shareholders, disputes may arise. These disputes often combine sensitive personal issues with high-stakes legal and financial matters. Unfortunately, when these conflicting elements are not appropriately addressed, shareholder disputes can result in the demise of an otherwise successful company.

What Are the Causes of Shareholder Disputes?

There are many causes of shareholder disputes. Given our deep experience and the range of shareholder disputes that we have successfully managed, our team of shareholder disputes attorneys are adept at pinpointing the issues that commonly arise, discovering potential challenges that are not readily apparent, and working with owners and companies to navigate the dispute as swiftly and efficiently as possible. Some of the most common causes of shareholder disputes that our clients have encountered include the following:

Breach of the shareholder agreement. An airtight shareholder agreement is often integral to the success of the company, providing both the business and the shareholders with a clear idea of rights and responsibilities. If a shareholder violates the agreement, other shareholders or owners may take issue.
Contention regarding company direction. This is particularly common in small, private companies as well as family-owned businesses. These disputes may involve a relocation of business, the termination of an employee, or a pivot in business objectives, among other issues. Contention over company direction is not always grounds for legal action, however, and many times these disputes can be alleviated through mediation or arbitration.
Fiduciary misdeeds. If a fiduciary causes damages to the company, or otherwise fails to act in the best interest of the corporation, shareholders may act to hold them liable for the incident. According to a study from Cornerstone Research, over 80% of merger and acquisition deals were challenged by shareholders due to a perceived violation of fiduciary duties – highlighting the regularity of these disputes.
Imbalance between minority and majority shareholders. Considering that the bulk of business decisions are made using a majority vote, minority shareholders may feel like they have minimal control in the company. This perception can lead to disputes about how decisions are made in the corporation.

At Hone Law, our shareholder disputes attorneys provide practical advice and holistic legal solutions to help prevent and resolve complex shareholder disputes. Through our approach, we will help you understand your rights and options to develop a strategy that effectively optimizes your success.

The Hone team collaborates around a table

How Do You Resolve a Shareholder Dispute?

Most shareholders hold a common goal: the desire to see the business succeed. Yet shareholder disputes can take on a life of their own, becoming destructive to business operations and sidelining the company’s objectives entirely. For this reason, achieving a swift resolution is essential.

The key to preventing catastrophe revolves around the formation of strong shareholder agreements and effective dispute resolution strategies. Our team prioritizes prevention when possible, and we help business owners draft strong shareholder agreements that ensure disputes can be managed early, with little effect on the company.

If conflict has escalated, however, dispute resolution is necessary. At Hone Law, we approach shareholder disputes from a multi-view perspective, looking at the issue holistically to develop the most effective resolution strategy. Generally, dispute resolution can take three forms, which include the following.

Mediation

If amicable negotiation is possible, mediation may be the most effective strategy to resolving the shareholder dispute. Mediation is an excellent dispute resolution mechanism, relieving tension by allowing all parties to come to the table with their shareholder dispute attorneys and a qualified, objective mediator who oversees the process. Mediation is advantageous because it allows the involved parties to control the outcome and reach a mutually beneficial agreement without the need for court interference.

Arbitration

Arbitration is another alternative dispute resolution strategy that allows all involved parties to resolve the issue outside a courtroom. Unlike mediation, arbitration calls on a private judge to analyze the evidence and decide on the outcome of the case. The arbitration process is governed by Nevada’s Uniform Arbitration Act, making this an official process with a legally-binding outcome.

Litigation

The idea of litigation can be off-putting, but when used as a necessary tool and legal strategy, litigation may be the most effective means to a favorable end. When used strategically, litigation can help protect your interests and extinguish a shareholder dispute before it spirals out of control. Our team of experienced shareholder disputes attorneys are highly-capable litigators with a proven record of success. We will work with you to develop a clear roadmap and serve as your trusted advisor at every step of the litigation process.

Contact an Experienced Shareholder Disputes Attorney at Hone Law Today

Many law firms view shareholder disputes as strictly litigation matters. At Hone Law, we use a more holistic, forward-thinking approach. Our team of knowledgeable shareholder disputes attorneys will review your case to determine the most ideal strategy for resolving the problem, using litigation as one of many possible options.

The structure of our law firm lends itself to team collaboration and an interdisciplinary approach. Depending on the facts of your case, we will deploy different attorneys and professionals to address the problem most efficiently and successfully.

FAQ

What do shareholders need to prove a claim for breach of duty of loyalty?

In Nevada, corporate officers and directors owe fiduciary duties to the corporation and its shareholders. One of these pivotal fiduciary duties is the duty of loyalty. To successfully allege a breach of the duty of loyalty in Nevada, shareholders generally need to establish these elements:

Existence of Fiduciary Duty: Begin by establishing that the individual (typically a director or officer) indeed owed a fiduciary duty to the shareholders.
Breach of that Duty: Demonstrate that the director or officer acted in a manner that was not aligned with the best interests of the corporation or its shareholders. This might include actions that further their personal interests at the expense of the corporation.
Conflict of Interest: One of the most common manifestations of a breach of the duty of loyalty is a conflict of interest. This arises when a director or officer has a personal stake in a transaction, potentially compromising their ability to act solely in the corporation’s best interest.
Resulting Harm: Shareholders must show that the breach harmed the corporation. This could manifest as financial losses, damage to the corporation’s reputation, or other tangible adverse effects.
Absence of Fairness: In some cases where a conflict of interest is evident, the burden might shift to the accused director or officer to prove that the transaction was fair to the corporation despite the conflict.

Given the legal nuances associated with proving a breach of the duty of loyalty, company shareholders are advised to seek counsel from a Nevada attorney experienced in corporate litigation. The legal professionals at Hone Law can guide shareholders in building a case, navigating the legal landscape, and ensuring that corporate officers and directors are held accountable for their fiduciary duties.

Audit business woman working with notebook and tablet on desk.

What do shareholders need to prove a claim for breach of fiduciary duty?

In Nevada, corporate directors and officers owe fiduciary duties to both the corporation and its shareholders. When these individuals fail to act in the best interests of these parties, they can be held accountable for breaching their fiduciary duties. To establish a claim for a breach of fiduciary duty in Nevada, shareholders must establish that a fiduciary relationship existed between them and the director or officer in question. In the corporate context of Nevada, directors and officers inherently owe such duties to the corporation and its shareholders.

Shareholders also need to prove that the director or officer’s conduct deviated from the standards expected of their fiduciary role. This could involve actions that were negligent, self-serving, or in some other way not in line with the best interests of the corporation and its shareholders. Ultimately, it is important to show a link between the breach of duty and harm caused. Shareholders must demonstrate that the director or officer’s breach directly led to damages or adverse effects on the corporation or its shareholders.

In the end, the fiduciary breach must have caused quantifiable harm to either the corporation or its shareholders. This could be in the form of financial losses, diminished stock value, reputational damage, or other tangible setbacks.

Nevada recognizes both the duty of loyalty and the duty of care as core fiduciary duties. Therefore, a breach might arise from conflicts of interest, failure to act in good faith, negligence, or failing to exercise reasonable care in decision-making.

Given the complexities of corporate litigation, to protect their legal rights, shareholders in Nevada should consider visiting with an experienced shareholder disputes attorney when alleging a breach of fiduciary duty. The experienced team of legal professionals at Hone Law can provide invaluable guidance in articulating the claim, ensuring all elements are addressed, and representing shareholders’ best interests throughout the process.

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