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When someone purchases stock from your corporation, they become a shareholder of your company. With that purchase comes numerous shareholder rights – and often these rights are misunderstood by the shareholders and business owners alike. As a company offering shares to your corporation, you should be aware of the rights of your shareholders. If an issue of rights does arise, contact a shareholder dispute lawyer right away.
Rights of Your Shareholders
- Appraisal – Most shareholders are granted appraisal rights. They may have the right to get an appraisal on the company in order to sell their stocks at a fair price. Appraisals usually only happen when a consolidation or merger occur, when a sale of shares or assets is made, or when an agreement affects the value of the company.
- Dividends – Part of the reward for investing in a company is sharing in dividends. Shareholders, based on their stock amount, have the right to receive an equal share of dividends.
- Gifts – A company cannot make a large gift of their assets without getting approval from their shareholders. That includes giving out bonuses, incentive plans, etc. that are not already pre-authorized under an employment contract.
- Inspection – Shareholders have rights when it comes to inspecting the company’s records and books. But, these rights are limited based on the state. If a shareholder wants the books inspected, you may want to consult a shareholder dispute lawyer to find out what limitations they have and in what instances they can legally ask to inspect the records and financials.
- Rights to Buy More – Typically individuals who already have shares have rights to buy additional stocks before they are offered to the public.
Hire a Lawyer Whenever You Have a Shareholder Right Dispute
Because the laws regarding shareholders are so complex, you should consult a shareholder dispute lawyer right away if a dispute does arise. An experienced attorney who specializes in partnerships and shareholders can help you identify what rights your corporation’s shareholders have and whether or not you have violated those rights.