Turning Probabilities Into Realities

  1. Business Disputes
  2.  → How could a Texas company address shareholder disputes?

How could a Texas company address shareholder disputes?

On Behalf of | Aug 30, 2021 | Business Disputes |

Whether investing in a publicly-traded or private enterprise, shareholders want to see a return on their funds. When a business’s profits drop or management makes controversial decisions, shareholders may become nervous or angry. Shareholder disputes could become a serious distraction for an enterprise, and some conflicts might lead to investors selling shares or even looking into legal action. Executives may consider taking steps to quell disputes before they become unmanageable.

Actions that company management may take

Business disputes could require executives to commit effort and resources to deal with shareholder complaints. A less time-consuming and costly strategy may involve attempting to meet shareholder requests. Shareholders might not appreciate having zero say in operations, even though they may only possess a minority interest. Perhaps some management decisions could require a majority of shareholder “yay” votes to implement. This way, shareholders don’t feel they are always uninvolved in decisions.

Keeping shareholders informed of all actions taken by the company in an easy-to-understand manner could help. Excellent and thorough record-keeping might be required by law, but there might not be detailed rules on organizing the information for shareholders. Providing clear, concise information about management decisions and operations to shareholders might minimize some concerns.

Addressing shareholder concerns

Establishing new rules and policies intended to reduce disputes could help all parties. Maybe shareholders would prefer restrictions on who may purchase shares. Keeping a particular competitor from buying shares and attempting a hostile takeover may appeal to some shareholders.

Other steps could help curtail disputes, including reviewing shareholder correspondence and noting social media activity. Unhappy shareholders could make their feelings known, so why not keep track of their public commentary?