Shareholder litigation & business ownership disputes

An ownership dispute can affect more than the value of an investment. It can disrupt management, income, employment and the future of the business. We examine the governing agreements, the company's records and the parties' conduct to identify the available claims, defenses and practical paths forward.

James is a contributing author to Shareholder Litigation, published by Thomson Reuters, and Advising Minnesota Corporations and Other Business Organizations, published by Juris Publishing.

His commercial litigation practice is complemented by experience advising businesses on formation, transactions, governance and winding up. That combination informs his approach to disputes involving both legal rights and ongoing business relationships.

Read James Magnuson's profile.

Conflicts among owners often involve decisions about who controls the company, how money is distributed and whether those managing the business have respected the rights of other shareholders. In closely held and family businesses, these questions can be intertwined with employment and longstanding personal relationships.

Issues may include exclusion from management, disputed compensation or distributions, voting rights, deadlock, transactions benefiting insiders and allegations that company assets or opportunities have been diverted.

For Minnesota corporations, Minnesota Statutes section 302A.751 provides potential equitable remedies in qualifying disputes, including certain circumstances involving deadlock, unfairly prejudicial conduct or misuse of corporate assets. The appropriate remedy depends on the statutory grounds, the governing agreements and the evidence.

When owners can no longer work together, the central questions may be whether an ownership interest can or must be purchased, how it should be valued and what terms govern the separation.

Shareholder agreements and buy-sell provisions can address triggering events, valuation methods, transfer restrictions and payment terms. A statutory buyout presents additional questions. A disagreement among owners does not automatically establish a right to a buyout or a particular purchase price.

We evaluate the contractual and statutory issues alongside the financial record, considering negotiated resolutions and litigation when an agreement cannot be reached.

Similar conflicts arise among members of limited liability companies, but corporate and LLC rules are not interchangeable. For Minnesota LLCs, the operating agreement and applicable statutes shape management authority, voting, distributions and the members' rights and obligations.

Disputes may concern control of the business, alleged misuse of funds, an attempted member exit or whether the company can continue operating under its governing agreement. Minnesota Statutes section 322C.0701 provides for judicial dissolution in specified circumstances and permits alternative remedies in certain proceedings. The available options depend on the grounds established.

Financial statements, ownership records, meeting minutes, governing agreements and communications among owners can be central to understanding an ownership dispute.

Access to records is itself sometimes contested. Minnesota provides inspection rights for qualifying corporate shareholders and LLC members, subject to the applicable requirements. The entity, requested records and purpose of the request can matter.

We also assess whether an alleged injury belongs to an individual owner, the company or both. That distinction can affect who may pursue a claim and the procedures that apply.

If a conflict over ownership, control or a proposed buyout is affecting your business, contact James Magnuson to discuss the circumstances and available next steps.

Contact James
612-716-3099
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