What happens when one shareholder secretly competes with the corporation in which she is a shareholder; when one shareholder excludes another from the benefits of the corporation; when a shareholder commits fraud or acts illegally; or when a shareholder wastes corporate money? The Illinois Business Corporation Act provides remedies for this misconduct: removal from the corporation, appointing a receiver to manage it under the supervision of the court, dissociation of the offending member, dissolution of the corporation, money damages, or a forced buyout of one shareholder by another at the “fair” value (not necessarily the market value) are all potential remedies.
The analysis of these business lawsuits begins with the corporate documents: the bylaws, shareholder agreements, and employment contracts, if any. These documents have to be analyzed in conjunction with the Business Corporation Act and the judge-made common law of fiduciary duties and good faith.
In public corporations, federal law provides relief in certain circumstances to regulate how control over the corporation is exercised: proxy fight regulations, analysis of tender offers, and disclosure obligations are all part of the analysis. Business litigation in these circumstances requires a close analysis of the securities laws as well as corporate paperwork.
Often these business disputes—both those of close (small) and public corporations require emergency action. If the wrongdoer is not stopped, the harm will occur without possibility of monetary reimbursement. In these circumstances, a temporary restraining order or a preliminary injunction is required.
The risk of these disputes can be reduced by drafting appropriate corporate documents and reaching clear agreements in advance. Cut and paste documents are cheaper to prepare, but may be more costly in the long run.
If you suspect that a fellow shareholder, officer, or director of a corporation is guilty of misconduct, you should consult a business litigation lawyer at once.
If you think we can help you on one or more of these matters, get in touch with Tom Patterson at once. He can be reached at email@example.com or (312)-223-1699.