Partnership and Shareholder Agreements
Our New York business and commercial litigation lawyers have handled numerous cases where business have fallen apart. Many of these litigation would be easier and even unnecessary if a clear partnership or shareholder agreement had been drafted.
The old days when a handshake was binding upon business partners are over. Today starting a business is like getting married and it is essential that the existence of the partnership and its terms be reduced to writing. From our White Plains and Manhattan offices, our lawyers have handled numerous prolonged litigations among shareholders and partners. Often times, majority members take advantage of minority shareholders or partners. Common examples include pushing out or freezing out the minority shareholder. For example in some cases where there is no shareholder’s agreement, member’s agreement or partner’s agreement, the person who formed the company, be it a limited liability company or a corporation, simply change the locks and deny that the other person was ever an owner. A simple agreement executed in advance would prevent this from occurring. Remember if someone is not willing to memorialize the business relationship in writing, they are not your partner and are trying to take advantage of you.
Our New York and Westchester business lawyers also advise that you must carefully draft the dissolution provisions. Another common problem is where there is a majority owner, (where one owner has a higher ownership share than the other), and the agreement allows for dissolution by majority vote, the majority partner may dissolve the company against the wishes of the minority shareholder. While the majority shareholder, member or partner can still be sued for bad faith or breach of fiduciary duty, this can be a lengthy process, which can be avoided by some advanced planning. By requiring dissolution by unanimous vote, this prevents a dissolution against the will of the minority owner.
In other cases, members simply transfer their interests to family members, who come into the business and disrupt the workplace. Drafting provisions restricting the transfer of interest or requiring unanimous consent to transfer an ownership interest can prevent having an unwanted partner thrust upon you.
Our business and commercial litigation attorneys have extensive experience in representing business owners at all stages including formation, dissolution and in ongoing business problems.