What Legal Recourse Is Available To Resolve Disputes Among Business Owners?


If you are a shareholder in a corporation, partner in a partnership or joint venture, or a member of a limited liability company, you may be surprised to learn that even without a written agreement between you and your co-owners, Minnesota law has written an extensive system of rules that gives you certain extraordinary protections in business disputes, even if you are a smaller or minority owner of the company.

Shareholders in a closely held corporation, with no more than 35 shareholders, owe a fiduciary duty to one another. This duty has been described as the highest standard of openness, honesty and integrity.

This fiduciary duty concept permits minority shareholders to seek a court injunction curbing abuses of their rights, or a court-ordered mandatory buy-out of their shares, or, in an extreme case, dissolution of the corporation, where those in control act fraudulently, illegally, or in a manner unfairly prejudicial toward minority shareholders; where they are mismanaging, misapplying or looting corporate assets, or for certain other specified grounds.

The law provides minority shareholders with many other protections. For example, when those in control of the corporation act in a manner which adversely affects the rights of minority shareholders, shareholders can exercise certain dissenter's rights and require the corporation to purchase their stock for "fair value."

Minnesota law also gives any shareholder the right to examine the financial books, stock register, meeting minutes and other important corporate records, and provides a direct right of action, including an award of legal expenses, to enforce these rights.

Your company's articles and bylaws may also contain rules that protect minority shareholders. It is sometimes necessary for legal action to be brought to compel compliance with these protective provisions, such as requirements regarding the holding of shareholders' and directors' meetings, the election or removal of directors or officers, proper notice and scheduling of meetings, minimum voting requirements, and the like.

If you would like more information about disputes among business owners, please contact us through our e-mail or by calling (612) 339-4295..