No Small Matter: Resolving Minority Shareholder Disputes

Are you a minority shareholder in a company? If so, there's a chance you may eventually find yourself in a dispute with the majority shareholder(s) who has more control. But if you understand your options you can potentially resolve – and even avoid—disputes. Here are four important tips to keep in mind.

1. Head 'em off

Minority shareholders have two kinds of legal protection: securities legislation and shareholder agreements. The latter can include additional rights that extend beyond what's included in legislation. A shareholder agreement doesn't just fall into your lap. You must independently pursue one. In these agreements, the majority shareholder usually gives up rights to the minority. The agreement also provides guidance as to how shareholders conduct themselves and behave in certain situations. So, many potential issues can be addressed ahead of time in a shareholder agreement, saving you from future dispute.