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Shareholders’ rights in bringing action against a corporation

Shareholders’ rights in bringing action against a corporation

In Michigan, business operations for corporations are not always completely smooth. Disagreements can arise that lead to discord. Attempts to work them out amicably through negotiations are not always effective. Shareholders are part owners of the corporation and with that, they have the right to take certain steps when they are concerned about the behavior of the corporate directors and the direction of the company. Some of that might stem from the belief that illegality or impropriety is taking place. From the perspective of the directors, these complaints could be exaggerated, unfounded or outright wrong. When dealing with complex business matters, having experienced guidance can be crucial. Part of that is understanding the law regarding when action can be taken be shareholders.

Important points about shareholders bringing action against a corporation

If a shareholder believes the directors or others in charge of a corporation are committing violations whether it is to the shareholder or the corporation itself, action can be taken. Issues can include fraud, illegal activities, and unfair and oppressive acts that negatively impact the corporation or shareholder. Once grounds have been established that wrongdoing has taken place, the court can take certain steps to address the behavior.

Those steps include the business being dissolved and its assets liquidated; provisions in the articles of incorporation being canceled or changed; the articles of incorporation being altered; or the bylaws being changed. It can cancel, alter or issue an injunction preventing resolutions or acts the corporation has sought to implement; prohibit acts sought by the shareholders, directors, officers or others; order the purchase of the shareholder’s shares in the corporation at a fair price; and award damages to the shareholder. The key is assessing the course of conduct that might be damaging the shareholder or the shareholder’s interests.

Professional advice can be essential with shareholders’ rights

The news is constantly telling stories about corporations that might be engaging in unscrupulous or selfish activities that ignore the needs of shareholders. Vigilant shareholders should be cognizant that they have rights under the law to put a stop to these activities or to be justly compensated for what happened. On the other side of the coin, just because a shareholder is complaining, it does not mean the allegations are true. With business litigation, having experienced representation can analyze the case and seek solutions.