The Control Of A Company With Several Owners

The Control Of A Company With Several Owners

The presence of the other owners can greatly affect the work of the majority interest owner of the business. In general, the owner of a majority stake in the field will ultimately be able to manage the business, but there may be significant problems associated with other property owners with a minority stake.

Owners most often want to allow a key employee, spouse, family or an investor to own a minority stake. The reasoning often involves the belief that if the employee has an interest in the future of the company the employee will be more motivated to improve in the best interest of the company, the desire to reward past performance, a strategy to avoid paying interest on a loan or fulfill a requirement for an investor. In general, despite the transfer of interest of certain assets, the majority owner intends to maintain control (including the possibility of selling the compensation of corporate control, and take all important decisions).

In general, without the written agreement with the owners, most laws provide certain rights of a minority shareholder. When the sale or dissolution of a business, a minority owner is entitled to the share of income that remains after all debts have been paid. If the distribution of profits, a minority shareholder has the right of distribution. Minority shareholder can require the business accounts, usually a limited right to examine the books and financial records. If you oppress a minority owner of the owner, usually a violation of one or more of the above rights, or engage in fraud, minority shareholder may be entitled to contest the violation of property. Remedies such legal action may be dismissed (where the business of the company has taken the court-appointed receiver) and the dissolution of the business.

Imagine a minority owner angry and vengeful light in some real or supposed, to take legal action to demand that the company immediately be controlled by a receiver and will be settled over time. While the majority owner of interest could ultimately prevail, all owners have been lost due to damage to the company by the body.
No matter what business unit, some business decisions require agreement super-majority interest. Some important decisions a company will require two-thirds or three-quarters majority, and many corporate decisions require unanimous member (owner) consent. A dissenting minority interests can affect the majority of control of interest rates on these issues. In the absence of a restriction in writing to the contrary, a minority owner to sell majority stake to a third party (perhaps a competitor).

If an owner of the minority is present, the majority shareholder's action will be limited by considerations of fiduciary duty and concern with the vote requiring a special majority for action. Some of the actions of the minority shareholders interest (such as the sale of the participation of an adverse party) should be limited.
If there are multiple owners, most will be controlling participation, if the owner has the right to minority interest owners of minority interests in the occurrence of certain events. These events, where a minority owner is likely to be dissident, is easily manageable, and are those in which control of the majority owner could be affected. For example, a written agreement between the owners decide that in the case of a termination, the minority of the employee must be sold to the company. Such an agreement between the owners may also address questions on the predictable death or disability of the majority owner, the management involvement of owners in the decisions in the short and long-term operation in critical business decisions (finance company or sale or merger of the Company), payments to owners based on equity and compensation of employees.

For most holders and minority interests, questions of value and control in certain predictable situations must be a written agreement between the owners. "The agreement, according to circumstances, sometimes considered a sale and purchase agreement or a shareholders' agreement and must be written on the basis of the property (strategic) business plan.
Rick Riebesell is Senior Consultant and Chief Transition Consulting LLC (http://www.btcllc.net). Rick finds solutions to problems for owners of closely held (owner-operator) business. He has experience in commercial transactions of all types and include sophisticated estate planning. Rick was a practicing lawyer for over thirty years.
Succession Planning Business - Forms and Practice Manual published by the publishing company tracking data is the latest book by Rick. Rick runs a blog http://blog.btcllc.net and makes presentations on business succession issues.

Posted in: Strategic Planning