Can a Shareholder Agreement Prevent a Dispute?
While shareholder agreements cannot always prevent shareholder disputes or associated litigation, they can help end them. Shareholder agreements are binding contracts, and strong business contracts might result in more favorable judicial outcomes and give you leverage during alternative dispute proceedings.
Avoid expensive shareholder litigation and proactively address potential disputes with the experienced Denver commercial business attorneys at Brown Dunning Walker Fein Drusch PC. Schedule a shareholder agreement consultation with their corporate lawyers today.
Common Shareholder Disputes in Denver
Shareholder disputes arise for various reasons, most commonly differences in vision, problems with leadership, conflicts of interest, and power struggles. The diversity and often subjectivity associated with these disputes make it difficult to prevent every disagreement with a contract alone. However, shareholder agreements drafted by experienced corporate lawyers in Denver can significantly reduce the risk of expensive litigation by addressing the remedy for the most common shareholder disputes before they occur.
Drafting Strong Colorado Shareholder Agreements
Colorado corporate laws recognize the enforceability of shareholder agreements. These agreements, governed by both contract and corporate law, should contain certain key elements aimed at preventing shareholder litigation. These often include the following:
Shareholder Rights
Strong shareholder agreements should always define how shareholders can transfer, buy, or sell stock. They might also prevent disputes by including succession provisions if the majority shareholder suddenly dies. Setting forth how your company values shares, shareholders’ preemptive rights to purchase new shares, and certain buy-sell provisions can also prevent confusion and litigation. Provisions clearly restricting transfer and otherwise defining shareholder rights go a long way in preventing individual shareholder litigation.
Leadership and Structure
While you cannot contract away the good-faith fiduciary duties owed to Colorado shareholders, you can protect leadership through a shareholder agreement that addresses the following:
- Duties and obligations of shareholders
- Decision-making processes, including deadlock clauses
- Shareholder and director meetings
- Corporate vision
- Voting rights
- Appointment and removal of leadership
- Board composition
Clearly defining the corporate structure, including the expectations placed on leadership and officer roles, can reduce common shareholder disputes.
Dispute Resolution
Arbitration provisions are among the strongest and most neglected terms to include in Denver shareholder contracts. You may include certain alternative dispute resolution (ADR) provisions – generally, arbitration clauses – within the shareholder contract. Arbitration agreements require shareholders to bring their concerns before a neutral arbitrator rather than a court of law.
Even if a shareholder files litigation, an experienced corporate ADR lawyer can help you use the arbitration agreement to remove the case from court and place it before an arbitration panel. This typically results in the significant reduction of legal fees and faster, binding legal decisions.
Denver Shareholder Agreements Lawyer to Prevent Disputes
Not every business investor understands complex corporate laws, which is why it’s difficult to prevent all shareholder disputes with a contract alone. Shareholders may still bring litigation even when the shareholder agreement clearly addresses their concerns. However, working with an experienced Denver corporate attorney from Brown Dunning Walker Fein Drusch PC to draft strong shareholder agreements can significantly reduce the risk and expense of Colorado shareholder litigation.
Call our experienced business legal team at (303) 239-3363 or connect with us online to schedule a consultation.