By Fredrick P. Niemann, Esq., a NJ Shareholders Attorney
As a shareholder of a New Jersey corporation, it is important to understand your fiduciary obligations. All shareholders throughout the state owe a reciprocal fiduciary duty to other shareholders within their corporation. This relationship is one of trust, confidence, loyalty and good faith, and is to be honored at all times.
New Jersey law allows for legal action to be taken by any NJ shareholder who is the victim of a breach of fiduciary duty by their fellow shareholder. These claims arise if a shareholder, typically the majority shareholder, operates the business in a manner that is detrimental to the minority shareholders of the corporation. For example, majority shareholders cannot engage the company in a business juncture merely for their own personal gain. All decisions by majority shareholders on behalf of the business must be made in good faith and must be made purely in the best interests of the corporation.
It is important that all shareholders understand that the fiduciary duty of good faith and fair dealing requires honesty and transparency. Majority shareholders must provide proper information regarding business decisions to all minority shareholders. If they give false, misleading, or intentionally inaccurate information, they could be subjected to a claim for breach of their fiduciary duty. When a shareholder brings a breach of fiduciary duty claim questioning a corporate transaction where majority shareholders gained a significant profit, the burden of proving that the transaction was fair and equitable fall on the majority shareholder.
Contact me personally to discuss your NJ Shareholder matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or email me at fniemann@hnlawfirm.com/.