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Resolving Shareholder Disagreements

 Posted on May 21,2024 in Litigation

Fort Lauderdale, FL shareholder dispute attorneyShareholder disagreements are an unavoidable part of working in business. However, if such disagreements are not properly resolved, they can have a negative effect on the health of a company. Florida state law has a clear structure for solving these disputes while fully respecting the business and ensuring the sustainability of stakeholder rights. 

If you are involved in a shareholder disagreement, understanding your rights and options is important. By hiring an attorney, you can ensure you understand how to properly navigate the situation while keeping the law and protecting your own rights.

Understanding Shareholder Voting Rights

In Florida, shareholders have the right to vote on various matters affecting the corporation, such as selecting and dismissing directors and supporting substantial changes like mergers or acquisitions. Voting rights are generally proportionate to held shares. By understanding your voting rights, you can help influence important decisions that may resolve or prevent disputes.

Right to Information

Shareholders have the right to inspect corporate books and corporate records. This access helps to ensure transparency and allows shareholders to make the best decisions possible. If disagreements still arise, having thorough records and data can help clarify any confusion and provide a solid basis for resolving conflicts. 

Common Causes for Disagreements in Florida 

In Florida, shareholder disagreements may be caused by various factors, including:

  • Misaligned goals – Disagreements often result from differing visions about the company’s direction. These conflicts can arise when shareholders have different expectations regarding growth strategies for the company, as well as management practices and more.

  • Financial disputes – Conflicts can also emerge over financial issues, such as the allocation of profits, pay of executives, or perceived financial mismanagement. These kinds of disputes may be especially contentious and require careful handling to prevent unnecessary escalation.

Options for Resolving Disagreements in Florida 

Here are ways shareholders disagreements can be solved in Florida, including:

  • Negotiation and mediation—Direct negotiation between shareholders is often the first step to resolving conflicts. Communicating openly can also help clarify positions and ultimately find common ground. On the other hand, mediation, which involves a neutral third party, can also be effective. Mediators facilitate discussions and help the parties reach a mutually agreeable solution. 

  • Arbitration – This is when a neutral arbitrator listens to all the facts of a case and makes a decision on the outcome. These decisions may either be binding or non-binding, but arbitration agreements typically dictate that the outcome is binding, or enforceable. 

Buy-Sell Agreements May Help the Situation

In situations of conflict, buy-sell agreements are preemptive measures that outline how shares will be managed if a shareholder decides to exit the company or if disputes arise. These agreements can include terms of mandatory buyouts or options for remaining shareholders to purchase the shares from the departing shareholder.

Contact Broward County, FL Business Law Attorney

As with every issue in business law, resolving shareholder disagreements requires a clear understanding of your options. Instead of trying to become a legal professional overnight and trying to navigate the situation on your own, contact the dedicated Ft. Lauderdale, FL business lawyer with The Elliot Legal Group, P.A.. Call 754-332-2101 to schedule a confidential consultation.

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