Partnership disputes usually arise when partners are no longer able to agree on the company's management. When there are partnership disputes, you need a lawyer to assist safeguard your interests and guarantee that the dispute is dissolved or resolved fairly. We at South Texas Securities Co. can assist you resolve your partnership conflict and achieve the resolution you deserve. Answers to some of the common questions from our clients are listed below.
Most partnerships are based on a signed contract setting out the partnership's terms and conditions. The contracts shall determine the rights, responsibilities of the partners and the conditions under which the partnership can be withdrawn or dissolved. If there is no written partnership agreement then under New York Partnership Law a partner may withdraw at any moment. The withdrawing partner also has the right to purchase his stake in the partnership.
Most state laws provide the right to a partner to manage and be involved in the partnership. This includes the right to see the books and records of the partnership. Excluding a partner from the business of the partnership can be a ground to dissolve the partnership.
The first step in such a case is to refer the shareholder agreement’s terms that often list out the role of a shareholder in the company’s management. In the case of no shareholder’s agreement then as a shareholder, you have a right to the reasonable expectations of your investment in the corporation. A shareholder’s reasonable expectations include the right to a return on your corporate investment. Courts will take dividend payment history and shareholders ' wages into account to determine whether the shareholder was treated unfairly. If there is any violation under such grounds then the courts will hold the company responsible for shareholder oppression.
Oppression of shareholders can be a basis for recovery and dissolution action. A determination of oppression is a factual inquiry that focuses on how the corporation is being managed by controlling shareholders. If the majority of shareholders deny the minority shareholders' reasonable expectations, a tribunal may order the company's liquidation.
Yes. If oppression, waste, or looting by the other shareholders can be established then a 50% shareholder has grounds to seek dissolution of the company.
There is a limited right under New York law to dissolve an LLC where it is not reasonably feasible to operate a company in accordance with the provisions of the organization or working contract. This section has been interpreted to exclude oppressive conduct against the member as a ground to dissolve an LLC. However, a member’s operating agreement may contain additional grounds for dissolution not contained in section 702.