It’s easy to set up most types of corporations these days.
However, corporate problems are a different story, especially those that involve feuding family members. For these problems, quiet lawyering has always helped me, and in more than one occasion, careful advice brought families back together.
Allow me to share my thoughts with the caveat that some of these might be largely inapplicable to purely commercial corporations, unburdened by family ties.
If you are no longer happy/satisfied, and you don’t have controlling interest over a corporation, carefully consider being bought out. Set a price and go to the negotiating table.
My clients who have chosen this option all said they feel they made the right decision. Most of them went on to start new businesses in peace. This is better than getting stuck in court for many years. More money for the lawyer but definitely more pain for the client.
In my experience with corporations involving family members, asserting the right to inspect corporate books and records is often a fatal step when the only objective is for the stockholder to know the true value of his/her shares.
Inspection expenses can add up. The requesting stockholder needs to pay the accountant, the supervising lawyer, and any other person who will conduct the inspection and he/she also needs to pay for all other expenses, including photocopying costs.
On more than one occasion, I’ve witnessed a family member get less than what my client corporation was willing to pay for, after the results of the corporation inspection came in. Their share value was greatly diminished based on audit results.
If you do choose the remedy of inspection to get the true value of your share, make sure your lawyer does it right. The request letter should be specific as to purpose and even the documents to be inspected.
When my client wants to know the true value of his/her share, I always consult a good accountant who can tell me what documents are needed for that purpose, and what documents are useless. This will also save the time and money of your client.
If lawyers rise to the challenge of becoming peacemakers rather than gladiators, we can always begin our conversations with our clients with “Why” instead of “What happened” or “What do you want to do?”
Ask: Why do you want to file this case? Why do you want to get out of the corporation? Why do you feel this way about the family members in your corporation?
Understanding the motivation and feelings of the client, in my experience, helps me craft better options for them. Many times, I’ve helped them avoid getting stuck in courts for many, many years.
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Author’s email: goldabenjamin@gmail.com
