Section Newsletter Articles on Shareholders

Could a departing shareholder’s continuation with the company as an employee or a consultant be treated as a “retained interest” under Section 2036 or 2701 of the tax code? By Hilary E. Wild Trusts and Estates, September 2016 What if your client wants to remain an employee or an independent contractor of a corporation after gifting his stock in the corporation to his children?
Attorneys are subject to malpractice actions for mishandling shareholder derivative claims, but not by investors asserting claims in their individual capacities and not by former shareholders By Michael R. Karnuth Business and Securities Law, June 2016 In Stevens et al. v. McGuireWoods LLP, the Illinois Supreme Court held that shareholders cannot sue (in their individual capacities) a corporation’s attorneys because the attorneys’ duties runs to the corporation only, individual shareholder recoveries are not available under derivative claims, and shareholders cannot pursue derivative claims for the corporation if they have already divested themselves of the company’s shares.
The Sunlitz decision: A primer on shareholder demand for corporate books and records when self-dealing is at issue By Charles W. Murdock and Katelyn Sprague Business and Securities Law, November 2015 In Sunlitz Holding Co. W.L.L. v. Trading Block Holdings, Inc., the court reaffirmed the view that good-faith fears of mismanagement, in contrast to proof of actual wrongdoing, support a proper purpose for inspection of corporate books and records under the Business Corporations Act of 1983.
Oppressive conduct and failure to follow court orders leads to punitive damages against shareholder’s estate By Charles W. Murdock and Kevin Harris Business and Securities Law, June 2015 The recent Illinois Appellate Court opinion in Kovac v. Barron reflected the scope of the fiduciary duties owed by shareholder-directors in closely held corporations, and the equitable remedies Illinois courts may employ in such situations.
Shareholder disputes: What is the appropriate standard of value? By Brian R. Potter Business and Securities Law, May 2013 Shareholder and partner disputes can arise for a variety of reasons. Parties to these disputes should be cognizant of the nuances that may be involved in the valuation of interests in closely held businesses in such matters, including the appropriate standard of value to be applied.
In re Synthes, Inc. shareholder litigation—Of fiduciary duties and footnotes By Tracy J. Nugent Business and Securities Law, February 2013 In Synthes, the court addressed the fiduciary duty of a director who was the majority stockholder, and five other members of the Synthes Board of Directors he allegedly controlled, in the negotiation of the sale of the company.
Deciding to be dissident: Proxy contest basics for non-registrants By Cory White Business and Securities Law, January 2013 This article provides a very basic guide to non-registrants, i.e. dissident shareholders, who wish to proceed in a proxy contest.
The significance of share transfer restrictions for closely held corporations By Derek P. Usman Business and Securities Law, May 2010 Without an agreement restricting share transfers, corporate shares would be freely transferable and prevent the remaining shareholders from maintaining a desirable ownership structure.
Arbitrability of shareholders’ disputes under German Law By Jan Kraayvanger and Mark C. Hilgard International and Immigration Law, February 2010 It has been a matter of dispute for a long time whether and under which preconditions disputes regarding the validity of shareholders’ resolutions of a German limited liability company (GmbH) are arbitrable.
Is a dissenting shareholder’s “fair value” reduced by the potential income taxes and expenses of the sale and dissolution of the corporation when the sole asset of the corporation is one parcel of real estate? By Donald L. Shriver Business and Securities Law, January 2010 On July 23, 2009, the Second District Appellate Court issued its decision “vacating and remanding” the Winnebago County trial judge’s decision in Brynwood Company v. Schweisberger et al. 912 NE 2d 1281 332 Ill Dec 395 (2nd Dist. 2009.)
Shareholder loans made simple By Derek P. Usman Federal Taxation, January 2007 Shareholders of a corporation taxed under Subchapter S of the Internal Revenue Code may elect a “pass-through” taxation system.
Planning for business disputes and financial difficulties: Asset protection for shareholders By Robert C. Knuepfer and David F. Rolewick Business and Securities Law, June 2006 The topic of “Asset Protection” has become a “hot item” in estate and business planning literature in recent years, fueled by the failure of publicly traded companies, shareholder actions against officers and directors and S.E.C. actions against officers and directors of publicly traded companies as well as the ever present willingness of members of our society to blame others for their misfortune and to find attorneys willing to litigate the point.
The fiduciary duty of a shareholder: Hagshenas, Dowell and related amendments to the Illinois Business Corporation Act By Tracy J. Nugent Business and Securities Law, April 2006 The fiduciary duty of officers and directors to the corporations they serve is well settled. Illinois courts have found that in certain situations shareholders of closely held corporations owe this fiduciary duty as well.
Members’ derivative rights on behalf of Illinois not-for-profit corporations By R. Stephen Scott Corporate Law Departments, January 2006 With many organizations today operating as not-for-profit corporations, questions often arise about members of NFPs asserting rights in the nature of derivative rights of shareholders of business corporations.
Shareholder disputes should be mediated By Deborah S. Bussert Alternative Dispute Resolution, February 2005 Disputes among shareholders of closely held businesses are among the most costly, contentious and damaging types of litigation.