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Preventing Shareholder Oppression Claims

Close quarters create conflicts. Just ask anyone operating a closely held company. No matter how well individuals work together, personal interests often influence company decisions that not everyone agrees with. Unfortunately, such disagreements commonly lead to actions that, intentional or otherwise, amount to shareholder oppression. In many cases, however, these actions are preventable.

Whether you’re thinking of starting a closely held company, or experiencing conflicts in an existing company, a shareholder oppression attorney can show you how to prevent or remedy those conflicts.

Oppressive conduct and resulting oppression claims can largely be avoided by adherence to comprehensive company documents. After all, if you’re doing everything by the book and that book is well written, what could there be to claim? Company documents can operate to address potential issues before those issues occur by providing agreeable methods for resolving them. We’ve written about some of these issues before, from procedures for valuing and buying and selling ownership interests, to removing directors and managers, and the authority and limitations on those positions. When company documents detail procedures for companies to follow during internal conflicts, adherence to those documents can serve as the best defense to potential oppression claims.

Of course, you can’t predict every potential conflict. Even so, where company documents don’t successfully prevent oppression claims, they may still serve to guide the parties toward favorable remedies. Whether or not you’re proactive about preventing conflicts, you should contact a shareholder oppression attorney who can help your company deal with issues before and as they arise.

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