Question 1

What fiduciary duties do shareholders and directors owe each other in Utah?

Accepted Answer

In Utah, corporate directors and officers owe fiduciary duties of loyalty and care to the corporation and its shareholders. The duty of loyalty requires them to act in the best interests of the company and avoid self-dealing. The duty of care requires them to act with the care of a reasonably prudent person. Majority shareholders in closely held corporations may also owe fiduciary duties to minority shareholders.

Question 2

What is minority shareholder oppression?

Accepted Answer

Minority shareholder oppression occurs when majority owners use their control to harm minority shareholders — for example, by denying dividends, excluding them from management, diluting their ownership, or terminating their employment. Utah law recognizes oppression as a basis for judicial relief, including a court-ordered buyout of the minority shareholder's interest at fair value.

Question 3

Can I force a buyout of my shares if I am being squeezed out?

Accepted Answer

Yes, in many cases. Utah law allows oppressed minority shareholders to petition for a court-ordered buyout of their shares at fair value. The court may also order other equitable relief, including dissolution of the company. The availability of these remedies depends on the specific facts of your situation and the terms of any shareholder agreement.

Question 4

What is a derivative lawsuit?

Accepted Answer

A derivative lawsuit is a suit brought by a shareholder on behalf of the corporation to recover damages for harm done to the company — typically when the officers or directors who caused the harm refuse to pursue the claim themselves. Any recovery goes to the corporation, not directly to the shareholder, though the shareholder may recover attorney fees in some circumstances.

Question 5

How is the value of my shares determined in a buyout?

Accepted Answer

In a court-ordered buyout, the court determines the fair value of the shares — typically the proportionate value of the company as a going concern, without discounts for minority status or lack of marketability. The parties typically present competing valuations from financial experts, and the court determines fair value based on the evidence. Valuation disputes can be highly technical and require experienced legal and financial counsel.

Question 6

Can a business be dissolved because of a shareholder dispute?

Accepted Answer

Yes. Utah law allows courts to order judicial dissolution of a corporation or LLC when the owners are deadlocked, when those in control are acting illegally or oppressively, or when dissolution is reasonably necessary to protect the rights of shareholders. Dissolution is a drastic remedy that courts order when other relief is inadequate, but it is a powerful tool in shareholder disputes.

Question 7

What should I do if my business partner is stealing from the company?

Accepted Answer

If you believe a business partner is misappropriating company funds or assets, you should consult an attorney immediately. You may have claims for breach of fiduciary duty, conversion, and fraud. You may also be able to seek emergency injunctive relief to freeze assets and preserve evidence. Acting quickly is critical to protecting the company and your investment.

Question 8

Does my shareholder agreement affect my rights in a dispute?

Accepted Answer

Yes, significantly. Shareholder agreements, buy-sell agreements, and LLC operating agreements often contain provisions that govern dispute resolution, buyout rights, valuation methods, and exit procedures. These agreements can expand or limit your statutory rights. We carefully review all governing documents at the outset of every shareholder dispute to understand how they affect your options.

Shareholder Dispute Lawyer Utah

Utah Shareholder & Business Partner Dispute Attorneys

Types of Disputes We Handle

Breach of Fiduciary Duty

Minority Shareholder Oppression

Derivative Actions

LLC Member Disputes

Business Dissolution

Valuation & Buyout Disputes

Frequently Asked Questions

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