Recent Delaware Law and Closely Held Business Disputes

#shareholder #oppression #litigation

Jeshua Lauka's Business and Real Estate Law Blog

I just read in the ABAJournal article that Delaware passed a law favorable to shareholders in litigation.

“A law banning corporate bylaws that impose a hefty price on investors who file unsuccessful shareholder derivative suits has been signed by Delaware’s governor.”

The Delaware legislature apparently recognizes  the challenges that minority shareholders can face in closely held businesses.

In my practice, one fundamental challenge that I have seen is this:

In a closely held company it is very easy for one group of owner[s] to freeze out another owner.

I guess the first question is, “freeze out from what*?”

                         Control – Decision-making

                         Disclosures of Company Business

                         Profits in the Company

                         Employment in the Company.

What should a business owner/operator do to protect himself/herself?

Well, you have two readily apparent choices – address the issue before the business is formed, or address it once the problem arises.

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Noncompete Agreements Should Explicitly Limit Geographic Scope and Activities

ColTex Business and Employment Law Blog

In most jurisdictions, including Texas, to be enforceable a noncompete agreement must be reasonable in the scope of its geographic limitation and in the scope of activity restrained. Much litigation has arisen concerning whether specific geographic and/or activity limitations were reasonable under certain circumstances. But what if the noncompete agreement is silent?

A recent 8th Circuit decision, applying Arkansas law, upheld judgment on the pleadings against an employer whose noncompete agreement failed to set forth its geographic scope or the scope of activities proscribed. The noncompete agreement provided:

COVENANT NOT TO COMPETE: The Employee agrees that during the term of this Agreement, and for two (2) years following termination of this Agreement by the Company, with or without cause; or, for a period of two (2) years following a termination of this Agreement by the Employee, the Employee will not directly or indirectly enter into, be employed by or…

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Access to Client Lists May Warrant Litigation Over Noncompete and Nonsolicitation Agreements

ColTex Business and Employment Law Blog

With increasing job mobility, lower profit margins and heightened competition, and the ease of access to confidential information, more companies across various industries require their employees to execute non-compete and/or non-solicitation agreements. Employees may still retain the ability to move jobs but they may be restricted in their performance of those new positions, particularly when moving to a competitor in the industry.

On April 13, 2015, Citibank initiated litigation in New York to prevent a former vice president of its private banking division, Citi Private Bank, from using its client information to solicit business in his new position with one of its direct competitors. Citibank argues in its lawsuit that the former vice president, Mourra, is improperly utilizing confidential information, namely client lists and contact information, to reach former clients and solicit them to move their business to his new company. In this case, the conduct allegedly runs afoul of…

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What Is Probate and How Could It Affect You?

Inheritance Data Blog

probate Image Credit: Gillie Rhodes on Flikr Commons

Probate is the process of applying for the right to deal with deceased persons affairs and administrate their estate.

The process of probate varies according to whether the deceased has left a will or not. We will be examining the differences between the two to ensure that if the need arises, you will know exactly what to do in each situation.

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