D&G Law

Shareholder disputes/Corporate governance – Case Example

photoaIf you own shares of a public company and you become dissatisfied, you can simply sell the shares and invest your money in something else.  But what if you own a minority interest in a private company?  You can’t easily sell the shares if they are not traded over a stock exchange.  What rights do you have if the majority owner refuses to allow you to participate in management or if they refuse to share the company’s profits?  The first step in enforcing shareholder rights is usually gaining access to information.  The following is an example from our own case files of a shareholder who went all the way to the U.S. Circuit Court of Appeals to enforce his right to inspect the corporation’s documents.

Our client owned over a million dollars worth of shares of the local bank, but was frozen out of the management of the bank because he was a minority shareholder. The first step in resolving his dispute with the majority was to force management to provide access to the bank’s records. We forced the bank’s president to provide us with documents, and when he dragged his feet on providing all of the records our client was entitled to see, we filed suit and took the issue all the way to the United States Court of Appeals before successfully resolving the issue. The full text of the Court’s decision, in Sewell v Bank of Wedowee, which was published in the official reporter of appellate decisions of the U.S. Courts of Appeal, is printed below.

Full Text: Sewell v. Bank of Wedowee