Every NJ Shareholder is a Fiduciary to Their Fellow Shareholders

HNW Business Law, Shareholder Rights Litigation

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 …

Shareholders In Closely-Held Corporations May Be Subject to Piercing of the Corporate Veil

HNW Business Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Shareholders Attorney  Many NJ corporations are structured today so that a few shareholders comprise the ownership of the business. These shareholders must be aware that the powerful “piercing the corporate veil” tool may subject them to individual liability for the corporation’s actions, even though they are not the sole owner of the business. The piercing of the corporate veil tool is used by plaintiffs to essentially pierce the shield that protects shareholders from liability stemming from acts of the corporation. Typically, owners/shareholders are not held personally liable for acts committed by the corporation as an entity. However, under certain limited circumstances, Courts will allow the plaintiff to hold to the individual shareholders themselves …

When Common Shareholder Disputes Arise

HNW Business Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Shareholders Attorney  Most closely-held NJ Corporations begin with a friendly, profitable relationship between a few shareholders. Unfortunately, these relationships don’t always remain amicable. Once businesses get underway, circumstances change. Expectations of the shareholders may vary as the business expands. Attitudes toward other shareholders may not be the same as they once were. As the business evolves, so do the views of the shareholders. Often times, individuals disagree on the direction the corporation is headed, with some favoring expansion and others happy with the way things are.  A difference in opinion does not give majority shareholders the right to oppress minority shareholders within their NJ corporations. New Jersey legislatures have protected minority shareholders by …

Determining the Value of Your Shares in a Corporation

HNW Business Law, Contract Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Shareholders Attorney When a minority shareholder feels as though their corporation is not operating in a manner that they are satisfied with, they often seek to be bought out. When the majority shareholder refuses to buy them out and operates the business in a manner that personally benefits themselves at the expense of the minority shareholders, this is a form of Minority Shareholder Oppression, a violation of New Jersey law. The NJ Supreme Court has said that when dealing with the Oppressed Minority Shareholder Statute, a 50% shareholder can be considered a “minority” shareholder, meaning they are entitled to bring a case to court alleging a violation of the statute. When a minority …

THE FIDUCIARY DUTY OF LOYALTY PROTECTS MINORITY SHAREHOLDERS IN NJ CORPORATIONS

HNW Business and Corporate Legal Services, Business Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Corporate Attorney   New Jersey is home to numerous “Closely-Held” corporations, or corporations consisting of a small number of shareholders or owners. Many times, these corporations encompass family members or close friends who have gone into business together. While everyone would like to think that nothing could ever go wrong with their closely-held corporation, trouble does arise and shareholders do find themselves disagreeing with others on certain business decisions. The final call in these decisions ultimately is left up to the majority shareholder, since they own the most shares in the business. It does not follow however, that majority shareholders may make decisions for their own benefit and at the expense of the …

Shareholder Buy-Sell Agreements and Restrictive Covenants Are a Key Part of All Employment Contracts

HNW Business Law, Employment Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Shareholder Dispute Attorney   Shareholder’s agreements should be an essential part of every small corporation’s structure in New Jersey. These agreements outline every aspect of  corporate government and shareholder ties to the business, including ownership and voting rights, control and management of the corporation, methods of resolving disputes, and two key provisions known as the buy-sell agreement and the restrictive covenant. Buy-sell provisions and restrictive covenants are both integral parts of a quality shareholders agreement, particularly in smaller businesses with fewer shareholders. Smaller corporations often elect to establish ownership via shares in the business. For example, a small corporation with four co-owners elects to establish that each member owns 25 shares out of …

Different Ways to Hold Investment Properties

HNW Business and Corporate Legal Services, Business Law, Real Estate, Landlord/Tenant, and Zoning, Shareholder Rights Litigation

By: Fredrick P. Niemann, Esq.           Convinced that the economy will improve sometime again, you decide it’s time to take the plunge and buy a business as an investment. As the saying goes, buy low and (hope to) sell high.  In such ventures, one of the earliest and most important decisions concerns which type of ownership entity is best suited for raising capital and securing the financing to fund the acquisition or improvement of the business. There is an extensive array of possible forms of ownership.  They include individual ownership, tenancy in common, joint venture, general partnership, limited liability, limited partnership, corporation, S Corporation, limited liability company (LLC). Here is a brief summary of the most common types of ownership …

Majority Shareholders Owe a Duty of Loyalty to Minority Shareholders in Closely-Held New Jersey Corporations

HNW Business and Corporate Legal Services, Business Law, Shareholder Rights Litigation

By Fredrick P. Niemann, a New Jersey Shareholder Attorney Many New Jersey Corporations are considered “Closely-Held” Corporations. These types of corporations consist of a small amount of owners or shareholders, sometimes family members, who work together to run the business. Usually these corporations run smoothly, but unfortunately conflicts sometimes arise and situations develop where shareholders disagree on certain issues. As most are aware, the majority shareholder has the right to make the final decision related to the business. What many are not aware of is that the majority shareholder may not make decisions that benefit themselves at the detriment or exclusion of the minority shareholders. This is due to what lawyers call the “Fiduciary Duty of Loyalty” that the majority …

Oppressed Minority Shareholders in Closely-Held New Corporations Have Rights

HNW Business and Corporate Legal Services, Business Law, Shareholder Rights Litigation

By Fredrick P. Niemann, Esq., a NJ Shareholders Attorney Closely-held corporations have a small number of shareholders who comprise the ownership of the business. Minority shareholders are those who own less than 50% of the shares and therefore are unable to dictate business decisions by themselves, something a majority shareholder can do. However, despite not solely being able to indicate how they want the corporation to be run, minority shareholders in New Jersey do have rights, mainly the right not to be “oppressed” by majority shareholders. An oppressed minority shareholder is one who does not get along with the majority shareholders of the corporation, yet upon request to be bought out by the other shareholders, is denied. This essentially leaves …