The governing documents of the business generally entitle the owners to review the company’s financials and other records. You should consult those agreements and potentially your attorney if you’re being denied access to financial information. Obviously, that is a red flag. This could be for any number of reasons, but often, it’s because one or more of the other owners don’t want you to see what they’re doing. In this type of situation, you should definitely consult with an experienced attorney because you should have rights under those agreements.
What Duties Do Business Owners And Board Members Have To The Business And To One Another?
Generally, owners have the duties required in the entities’ governing documents. An LLC would have an operating agreement. A corporation should have by-laws. If it’s a partnership, there should be a partnership agreement. If there is a joint venture, there should be a joint venture agreement. Regardless, there should be governing documents that detail what duties the business owners have to the business and one another. Many business owners have no idea what they are, but It is very important to understand your rights and duties that arise from the governing documents.
We’ve reviewed governing documents in many situations where it was clear that the owners have been operating outside of the rules and obligations set forth in the governing documents.
In addition, board of director members and business owners generally have “fiduciary duties” to the entity and each other. Generally, these include a duty of loyalty and duty to act in good faith. These fiduciary duties often arise when there are conflicts of interest between a business owner and the business.
We help many clients with corporate compliance and related issues. If you are not sure whether your entity is fully compliant, you should contact experienced counsel. They will review and advise you on what the documents provide and make suggestions if necessary to ensure compliance. In our opinion, the best use of your time is focusing on growing your business and leaving legal matters to an experienced business attorney.
What Rights Do I Have If I Disagree With Other Business Owners About Decisions And Strategies For The Company?
When you disagree with the other business owners about decisions and strategies for the company, your rights generally depend on the company’s governing documents and the percentage ownership you hold. In some instances, you might not be able to determine how the company is run, while in others you might. If you’re a majority owner, you’re generally going to have more rights than a minority owner. But even as a minority owner, you have rights, and a good set of governing documents would spell out what those rights are. If they’re poorly drafted, this could cause issues.
Therefore, it is important to have a lawyer analyze and advise you on the governing documents and related corporate issues on a regular basis, even if disputes are not occurring..
What Can I Do If My Business Partner And I Are Having Disputes And Our Agreement Has An Arbitration Clause?
If the governing documents contain a valid arbitration clause, one of the owners can require the parties to arbitrate any disputes. Arbitration is an out of court, legal proceeding. An arbitration award can be enforced in court, like a regular lawsuit, but it has certain advantages such as speed and privacy. That is why many businesses have arbitration provisions in their vendor agreements, governing documents and any number of other contracts.
It’s also possible there could be issues that aren’t suitable for arbitration. For example,, there may be a need for injunctive relief from a court if someone is misusing funds. An experienced business attorney can advise you of your rights and guide you through the legal process whether it involves arbitration or court action.
For more information on Financial Information In Business Partnerships, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (714) 594-6322 today.
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