Resolution of Business Ownership Disputes
Business Ownership Dispute Resolution Lawyer Accepting Clients Over a Broad Range of Ownership Disputes
When disputes arise over the ownership and control of a business, absent agreement between the owners and managers, resolving that dispute probably will require at least legal advice, and perhaps more. Whether a stockholder of a corporation, a member of an limited liability company, or a general partner in a general partnership, the law that may resolve the dispute is often complex requiring clear and nuanced analysis.
Formalities of the Ownership of Businesses
Under the law of Alabama, and most states including Delaware, the relationship between owners of corporations, limited liability companies, and partnerships is controlled by a mixture of state statutes, formation documents, and judicial opinions found in the reported decisions of appellate state courts.
Sometimes legal principles in statutes may be modified by agreement of the owners. Conversely some agreements of owners may be prohibited by statutes or judicial decisions.
The Alabama business organization statutes are arranged in a “hub and spoke” fashion so provisions common to one or more types of organizations sit as the “hub” of the statutes and the provisions applicable to different organizations are like “spokes.” Analysis of the statute must examine both the “hub” and the pertinent “spoke.” The most used statutory spokes include the Alabama Business Corporation Act, the Non-Profit Corporation Act, Alabama Professional Corporations Act, Alabama Limited Liability Company Act, Alabama Revised Partnership Act, and Alabama Revised Limited Partnership.
Causes of Disputes over the Ownership of Businesses
Many contributing factors cause business ownership disputes other than disagreements about the best course for running the business or who is the best person to manage the business.
- Problems in the documents forming the business organization.
- No planning
- Bad planning
- Ineffective implementation
- Ignorance of the law concerning ownership of the business.
- Problems resulting from addition, loss, or lack of involvement of owners.
- Lack of knowledge of the requirements of law or the controlling documents.
- Disregard of the requirements of law or the controlling documents.
Examples of problems in the ownership documents include:
- Ownership interests not in writing.
- Ownership interest changes not in writing.
- Writings do not conform with statute.
- Ownership muddled by death of owner and estate administration.
These problems are often multiplied by allowing festering problems to continue without resolution. Time may resolve these issues.
How to Resolve Business Ownership Disputes
The playbook for resolving business ownership disputes involves obtaining the documents and factual background sufficient to allow clear analysis and advice on the owner’s interests.
Those who claim ownership rights in a business have a variety of methods to obtain information about the ownership of a business depend upon the specifics of the statutes and judicial decisions applicable to the particular business. Rights to information vary depending upon whether the entity is a corporation, limited liability company or partnership.
Once sufficient information is gathered, strategy and tactics for obtaining a negotiated resolution through direct negotiations or within formal mediation may be evaluated. The owner must negotiate with the recognition that an inability to agree may cause litigation or possibly arbitration.
The owners of a business may ask a judge to declare the ownership rights in a business. Such a declaration may be obtained without seeking damages. If an owner has been damaged by an ownership dispute, the likely outcomes and cost of litigation to seek recovery of those damages may need examination.
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