Florida Shareholder Dispute Attorneys

A shareholder dispute is a fight between the owners of a company over control, money, or the direction of the business. Jimerson Birr represents majority and minority shareholders, LLC members, partners, and the companies themselves across Florida, from the first demand letter through trial, and on both the plaintiff and defense side of derivative claims.

Facing a shareholder dispute now? Call (904) 389-0050 or schedule a consultation.

What a shareholder dispute looks like

Private companies run on trust between their owners. When that trust breaks, the symptoms are familiar: distributions stop, a co-owner is pushed off the board or out of the office, the books become hard to see, a majority owner starts dealing with the company through related entities, or two equal owners simply cannot agree and the business stalls. Shareholders of a private company cannot sell on an open market, so the dispute cannot be walked away from. It has to be resolved.

Owners usually try to settle it among themselves first. That often widens the divide, and each month of drift can add liability exposure and give customers, lenders, and employees a reason to leave. The business and the individual owners often need separate counsel so that conflicts of interest do not infect the resolution.

What we handle

Our attorneys advise on disputes arising in corporations, limited liability companies, and partnerships, and we draft and review the governing documents those disputes turn on. Matters we handle include:

• Access to books and records
• Appraisal rights
• Board elections
• Breach of the articles, membership agreement, or partnership agreement
• Breach of fiduciary duty by an officer, director, or manager
• Breach of shareholder agreements
• Business dissolutions and liquidations
• Buy-sell agreements and buyout agreements
• Closely held and family-owned business disputes
• Conflict of interest transactions and self-dealing
• Executive compensation issues
• Fraud and fraud in the inducement
• Freeze-out actions
• Indemnification
• LLC member rights and partner rights
• Mergers and acquisition disputes
• Minority shareholder rights violations and majority versus minority challenges
• Misappropriation or embezzlement of company funds and mismanagement of company assets
• Shareholder derivative lawsuits
• Shareholder dividend or partnership distribution disputes
• Shareholder voting issues and voting deadlocks

Business divorce

When co-owners need to separate but the company should keep operating, the matter is a business divorce rather than a dissolution: one side buys the other out, or the company and its assets are divided, under the governing documents or by court order. Jimerson Birr handles business divorces for Florida corporations, LLCs, and partnerships.

The Florida statutes that decide most shareholder disputes

Most shareholder disputes are decided by the company’s own governing documents first, and by the Florida Business Corporation Act (Chapter 607) or the Florida Revised Limited Liability Company Act (Chapter 605) second. Four provisions come up again and again.

Judicial dissolution. A Florida court may dissolve a privately held corporation in a proceeding brought by a shareholder where the directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and as a result irreparable injury to the corporation is threatened or being suffered or the business can no longer be conducted to the advantage of the shareholders generally; where the shareholders are deadlocked in voting power and have failed to elect successors to directors whose terms have expired; where the corporate assets are being misapplied or wasted, causing material injury to the corporation; or where the directors or those in control have acted, are acting, or are reasonably expected to act in a manner that is illegal or fraudulent. Fla. Stat. § 607.1430(1)(b). The shareholder-petition grounds do not apply to corporations whose shares are covered securities or that have 300 or more shareholders and at least $20 million in market value of shares held outside insiders, measured when the petition is filed. Fla. Stat. § 607.1430(2). For an LLC, a member or manager may seek dissolution where, among other grounds, it is not reasonably practicable to carry on the company’s activities and affairs in conformity with the articles of organization and the operating agreement; where the company’s assets are being misappropriated or wasted, causing injury to the company or, in a member’s proceeding, to one or more members; or where the managers or members are deadlocked, the members are unable to break the deadlock, and irreparable injury to the company is threatened or being suffered. Fla. Stat. § 605.0702(1)(b).

Buyout instead of dissolution. Dissolution is rarely what either side actually wants. In a corporate dissolution proceeding under § 607.1430(1)(b), the corporation, or if it fails to elect, one or more shareholders, may elect to purchase all shares owned by the petitioning shareholder at the fair value of the shares; the election may be filed within 90 days after the petition, or later if the court allows. Fla. Stat. § 607.1436(1), (2). The court also has other alternatives to dissolution, including appointing a receiver, custodian, or provisional director. Fla. Stat. § 607.1434(1). The LLC Act has a parallel election when the petition is filed by a member. Fla. Stat. § 605.0706(1).

Deadlock sale provisions. Where the dispute is a deadlock of the kind that supports judicial dissolution, and a shareholder agreement that complies with Fla. Stat. § 607.0732, or an LLC operating agreement, already contains a deadlock sale provision (a redemption, a purchase and sale of equity, a governance change, or a sale of the company), that provision applies to the resolution of the deadlock instead of a court-ordered dissolution or buyout. For a corporation, the provision must be initiated and carried out within the time periods that govern the buyout election under § 607.1436. Fla. Stat. § 607.1430(3). For an LLC, it must be initiated before the court determines that deadlock grounds for dissolution exist, and then carried out under its terms or as the members otherwise agree. Fla. Stat. § 605.0702(2). This is why the first document we read in any deadlock is the agreement.

Access to books and records. A shareholder may inspect and copy the corporation’s basic records on at least 5 business days’ written notice. For accounting records, board minutes, the shareholder list, and other books and records, the written demand must also be made in good faith and for a proper purpose, describe with reasonable particularity the purpose and the records sought, and seek records directly connected with that purpose. Fla. Stat. § 607.1602(1) to (3). In a member-managed LLC, a member may, on reasonable notice, inspect the required records and other company records to the extent material to the member’s rights and duties; in a manager-managed LLC, a member may inspect the required records, but for any other company information must make a written demand describing with reasonable particularity the information sought and a purpose reasonably related to the member’s interest, and the information must be directly connected to that purpose. Either way, the company must respond in writing within 10 days to such a demand. Fla. Stat. § 605.0410(2), (3). Owners who are being kept in the dark usually start here.

Shareholder derivative litigation

A derivative action is brought by a shareholder on behalf of the company against directors, officers, or others who harmed it. Courts recognize these claims so that shareholders can hold management accountable for breaches of the duties of care and loyalty, self-dealing, waste, and fraud. Claims over voting rights, economic rights, and access to corporate information may be direct or derivative depending on the nature of the right asserted and the harm imposed.

Representing derivative plaintiffs

Our litigators handle claims on behalf of shareholders against corporations, directors, and officers for dereliction of duties, self-dealing, misappropriation of funds or assets, failure to disclose facts that affect the value of stock, refusing shareholder access to books and records, improper conflicts of interest, improper withholding of dividends, and interference with shareholder voting rights. The short-term goal is to stop the conduct and repair the damage; the longer-term goal is governance reform so the misconduct does not become the culture.

Representing the company, directors, and officers

In Florida, a derivative complaint must be verified and must allege with particularity the demand, if any, made on the board and either that the demand was refused, rejected, or ignored before 90 days passed, why waiting out the 90 days would cause irreparable injury or misapplication or waste of corporate assets, or the reasons no demand was made. Fla. Stat. § 607.0742. A court may dismiss the proceeding on the corporation’s motion where qualified directors, a committee of qualified directors, or a court-appointed panel determined in good faith, after a reasonable inquiry, that maintaining the proceeding is not in the best interests of the corporation, and the corporation bears the burden of proving the decision-makers’ qualifications, good faith, and reasonable inquiry. Fla. Stat. § 607.0744(1) to (3). We advise boards on whether to respond as a whole or to appoint a committee, and we structure those committees with the goal that their qualifications, good faith, and the reasonableness of their inquiry can withstand challenge. When a claim is unfounded, or a shareholder is using the derivative process for leverage, we defend the company and its directors and officers, beginning with the business judgment rule and Florida’s statutory protections: directors must act in good faith and in a manner they reasonably believe to be in the best interests of the corporation, Fla. Stat. § 607.0830(1), and in a derivative suit a director is not personally liable for monetary damages unless the breach involved conscious disregard for the corporation’s best interest, willful or intentional misconduct, an improper personal benefit, a criminal violation, or an unlawful distribution. Fla. Stat. § 607.0831(1). Where a settlement serves the company, we negotiate the governance reforms, payments, and notice to shareholders that a settlement involves, and we advise the company on indemnification and insurance for future claims.

Frequently asked questions

What are common shareholder disputes that lead to litigation?

Breach of fiduciary duty by an owner, officer, director, or manager who self-deals or misuses company assets. Freeze-outs, where those in control cut a minority owner off from distributions, information, or management; Florida’s judicial dissolution statutes do not list “oppression” as a ground, so these disputes are pursued through the claims and statutory grounds described on this page. Disputes over the interpretation or enforcement of a shareholder or operating agreement. Valuation disputes, which are most contentious when one owner wants to buy out another. Governance fights over the election of directors or the adoption of bylaws. And dissolution, when the owners cannot or will not continue together.

What do I have to prove?

The elements depend on the claim, but two requirements run through most of them. Standing: in a direct claim, the plaintiff must be an owner who was personally harmed by the defendant’s conduct; in a derivative claim, the plaintiff must have been a shareholder when the conduct occurred and remain one when suit is filed, and the harm is to the company. Causation: the plaintiff must tie the defendant’s breach to the harm claimed. Remedies can include money damages, injunctive relief, removal of officers or directors, a court-ordered buyout, or dissolution or sale of the company.

What are the common defenses?

Lack of standing, including a failure to follow the demand and other procedural requirements for a derivative claim. The business judgment rule. The statute of limitations. And lack of evidence that a duty was breached or that the claimed damages flowed from the breach. Every one of these turns on facts, which is why early document preservation matters on both sides.

Can the court stop the other side while the case is pending?

Yes, where the facts warrant it. Where assets are moving, a co-owner is locking others out, or records are at risk, we seek temporary injunctions and, in the right case, the appointment of a custodian to run the company, or a receiver, while the ownership dispute is resolved.

How do shareholder disputes usually end?

The usual endings are a negotiated buyout, a restructured agreement, a sale of the company, or a court-ordered remedy such as a buyout, a receivership, or dissolution. Which one is available depends on the governing documents and the statutes above, so the first step in every matter is reading those closely.

Why Jimerson Birr

We represent shareholders and companies on both sides of these disputes, including as counsel to derivative plaintiffs and as counsel to corporations, directors, and officers defending derivative claims. Our attorneys also draft and review shareholder agreements, operating agreements, and buy-sell agreements, and we consider cost-effective paths to resolution, including mediation and other alternative dispute resolution, before and during litigation.

Talk to a Florida shareholder dispute attorney

If you are an owner being frozen out, a majority owner facing claims, or a company caught between its shareholders, the sooner the right structure is put around the dispute, the more options may remain. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.