Shareholder

Describes motivation process for creativity with emphasis on intrinsic motivation by Corey K Katir

Drafting shareholder agreements is an important and complicated aspect of a business attorneys’ practice. While considered a business contract, shareholder agreements tend to be extremely emotional and have high stakes for clients. This program will review the nuts and bolts of shareholder agreements including the purpose of the agreements, important provisions and strategies for resolving conflicts.

• Review appropriate times for executing a new or revising an existing sharehold…

An expert faculty will examine recent developments in shareholder derivative litigation, including the spike in FCPA-related cases in light of increased regulatory activity; the duty to monitor business risk, as opposed to legal risk, in light of In re Citigroup Inc. Shareholder Derivative Litigation; the availability and proper scope of discovery; double derivative litigation and the impact of parallel class, regulatory and criminal litigation.

When shareholders at privately-held firms fight, legal advisors must quickly assess how courts will treat each side of the shareholder dispute. Whether a corporate attorney advising arguing clients before litigation has erupted or a litigator planning the initial stages of a trial, understanding legal trends is crucial to provide the best advice. Our speakers – one a corporate attorney and the other a litigator – will address both the legal theory and some practical tactics in managing shareh…

 • Understand how activist investors will drive corporate governance reforms.

   • Get tips for maintaining corporate control in the face of shareholder activism.

   • Review key regulatory developments that affect activist investing and corporate control.

As the level of shareholder activism has climbed to new heights, the SEC has been enhancing the tools available for activist investors. Activist investing is now a widely-accepted asset cl…

 • Understand how activist investors will drive corporate governance reforms.

   • Get tips for maintaining corporate control in the face of shareholder activism.

   • Review key regulatory developments that affect activist investing and corporate control.

As the level of shareholder activism has climbed to new heights, the SEC has been enhancing the tools available for activist investors. Activist investing is now a widely-accepted asset cl…

If you are in the process of having a Last Will and Testament drafted, or you are assisting a family member in having a Will created on their behalf, you should heed the following advice in an attempt to avoid potential future disputes. It is not uncommon for a party who might receive an unequal share under a Will, or have been entirely excluded, to seek to challenge a Will based upon numerous different grounds.
 

One of the grounds upon which the validity of a Will may be attacked is if the Will was not created and executed by disinterested counsel.  In general, this means that the party contesting the Will believes that the attorney who drafted the Will had either a prior relationship with one of the beneficiaries under the Will, had a personal stake in a bequest made under the Will, or the attorney allowed a beneficiary to directly participate in the drafting and execution of the Will.  Obviously, if the person seeking to create a Will has had their own attorney they have utilized for many years it is perfectly acceptable for this attorney to draft a Will.  Any potential beneficiaries to the Will, however, should not engage in discussions about specific provisions of the Will with the attorney who will be drafting the Will.  Moreover, any potential beneficiary should not be present or witness the Will which is being executed.
 

While it is okay to refer a person to an attorney to draft a Will on a party’s behalf, a party should be careful if the attorney to whom they are referring the individual has been their personal attorney, and they stand to benefit by provisions of the Will.  While this does not automatically invalidate the Will, a party should be careful to insulate themselves from discussions with the attorney about the provisions of the Will, and should not be present when the Will is executed.  If this was to occur, a party may assert that the attorney was not disinterested counsel, as their previous client benefitted by the terms of the Will he/she drafted.
 

One issue which may lend itself to a stern challenge is where an attorney drafted a Will under which he or she may be a direct beneficiary.  Equally suspicious is where a person drafts a Will on behalf of another party by which they themselves benefit.  While this does not rise to the same level of an attorney drafting a Will by which they benefit, it obviously creates suspicious circumstances which a party should avoid at all costs.
 

A review of the within advice will hopefully lend some guidance in the selection of proper disinterested counsel for the creation and execution of a Will on behalf of a party.  Should a party have questions, than they should consult directly with an attorney as to what would be the appropriate course of action.

Paul Norris is a Shareholder in Stark & Stark’s Litigation Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Norris.

Although, the statutory remedy for minority oppression in New York is dissolution of the company, Courts often use it as a remedy of last resort. That is because the dissolution of a company may result in innocent employees losing their jobs, as well as the destruction of the value of the business.

If the company is viable or profitable, the Court will generally use its equitable powers and order one party to buy out the others’ interests in the company. That ordered buy out will be based upon the “fair value” interest in the company. 
 
Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

New York law protects minority shareholders from oppressive conduct. However, New York’s dissolution statute does not define what constitutes minority oppression.

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

In previous blog posts, I made some comments about the importance of retaining a well qualified business valuation expert in minority oppression litigation. Again, the retention of a well qualified business valuation expert may be the second most important decision a client will make (the first being the selection of an attorney who knows how to handle this type of litigation) during the course of the case.

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

Jennifer D. Gould, Shareholder in Stark & Stark’s Bankruptcy & Creditor’s Rights Group will be a featured presenter at the 2012 ELFA Credit & Collections Management Conference. The conference will take place June 3-5, 2012 at the Hilton Baltimore in Baltimore, Maryland.

Ms. Gould is a member of the 2012 Conference Committee and will serve as Moderator at the Women in Leasing Breakfast on Monday June 4th at 7:00 – 8:15 AM. Ms. Gould will also participate in two panel presentations during the conference. The first, 2012 Legal Updates, will take place Sunday June 3rd at 2:15-3:15 PM. She will also be a featured presenter at the Tips, Tricks & Strategies to Enhance Collections seminar on Monday June 4th at 12:45-1:45 PM.

You can access additional information on dates, times, locations and other educational seminars, as well as information on how to register to attend the conference online here.

New York law provides protections for oppressed minority shareholders. These protections are contained in under New York’s minority oppression statute, it’s interpretation by the Courts along with New York’s recognition of the fiduciary duties majority shareholders owe the minority.
 

“Although the term ‘oppressive actions’ is not statutorily defined, the Court of Appeals has held that ‘oppression should be deemed to arise when the majority conduct substantially defeats expectations that, objectively viewed, were both reasonable under the circumstances and were central to the petitioner’s decision to join the venture.’” In re Dissolution of Upstate Medical Assoc. P. C., 739 N.Y.S.2d at 767 (citing Matter of Kemp & Beatley, Inc., 64 N.Y.2d 63, 73 [N.Y.1984] ['A shareholder who reasonably expected that ownership in the corporation would entitle him or her to ... a share of corporate earnings, ..., or some other form of security, would be oppressed in a very real sense when others in the corporation seek to defeat those expectations and there exists no effective means of salvaging the investment.'] ).
 

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

I often tell clients that selecting a qualified expert maybe more important that selecting a well qualified attorney who knows how to represent oppressed minority shareholders. An expert is usually required to provide opinion testimony as to the “fair value,” of the subject company. Often, that is the central issue in minority oppression litigation. Before an expert is permitted to provide opinion testimony as to the value of the company, they must possess the education, training and experience to render the opinion. Business valuation experts often have various designations.

This blog post will provide a quick overview of those designations.

• Certified Public Accountant (CPA) While it is helpful to retain a CPA, that designation alone may not be enough to qualify as a business valuation expert. That is because the CPA examination does not focus on business valuation.
• Accredited in Business Valuation (ABV) This is a person who has been certified by the American Institute of Certified Public Accountants. A person with the ABV designation has demonstrated to the AICPA that they have the knowledge and experience to value businesses. This designation is achieved by passing a test.
• Accredited Senior Appraiser (ASA) This is a designation given by American Society of Appraisers.  Because the American Society of Appraisers certifies a number of valuation disciplines, it is important that the correct discipline is chosen for the engagement.
• Certified Business Appraiser (CBA)  This is a designation created by the Institute for Business Appraisers.  This is a good designation. A person who has this designation must pass a test, complete a course, have an advanced degree and perform business appraisals.
• Certified Valuation Analyst (CVA) This is a credential created by the National Association of Certified Analysts. Often experts will combine the CVA designation with other designations. 

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

A beneficiary may seek to challenge the validity of a Will based upon an allegation of undue influence at the time the decedent created the Will. Generally speaking, this means that the Will was not the product of the decedent’s own free will and volition, but instead, was the product of undue influence asserted by another individual over the decedent thereby rendering the Last Will and Testament that was drafted not reflective of the decedent’s true intentions, but instead, the wishes of the party asserting undue influence.

Paul Norris is a Shareholder in Stark & Stark’s Litigation Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Norris.

A party also may seek to attack the validity of a Will by asserting that the decedent had a diminished mental capacity at the time the Will was executed. In general, a legal presumption applies that the decedent was of sound mind and was competent at the time he/she executed a Will. In fact, the law only requires a minimal degree of mental capacity when executing a Will.  Generally, the inquiry is whether the decedent comprehended the property of which he/she wanted to dispose, the beneficiary of said property, and the act of executing the Will.  Moreover, this understanding must only be present at the time the Will was executed. Even if the provisions of a Will may be shockingly unnatural or unfair, if it appears that the Will was executed at the time the decedent was competent and that it was the free and unconstrained product of their mind, then the Court should uphold the Will.
 

Should a beneficiary wish to challenge the validity of a Will based upon the mental capacity of the decedent, the beneficiary would bear the burden of proof to overcome the presumption that the Will was valid. As such, a beneficiary who seeks to uphold the terms of the Will need not establish its validity, but instead, a party who wishes to invalidate a Will must establish the incapacity of the Testator at the time the Will was executed. A challenge to the capacity of a descendent may involve a review of the relevant medical records, testimony of first-hand witnesses, as well as other factors which relate to the competency of the Testator at the time the Will was executed.
 

This is a general overview as to the mental capacity required of a descendent to execute a Will, as well as what an attack levied by another party seeking to invalidate a Will on the grounds of lack of capacity may entail.

Paul Norris is a Shareholder in Stark & Stark’s Litigation Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Norris.

In one of my previous posts, I identified three sub-parts or methods within the income approach used by business valuation experts to opinion as to the fair value of a closely held company in minority oppression litigation.  One of the three sub-parts I identified was the “Capitalization of Income,” approach.
 

The basic definition of the “Capitalization of Income” approach is what would a reasonable buyer and seller be willing to pay or accept to sell or acquire the income stream generated by the business? This method assumes that the business will generate a certain level of income for an indefinite period of time. 
 

The expert employing the “Capitalization of Income” approach first determines the “income stream,” generated by the company. In order to do so, the business valuation expert must determine an appropriate capitalization or “cap rate,” for the subject company. A cap rate is the inverse of a multiple.  It is the number of years that the subject company’s income for which one is paying/receiving to acquire the income stream. For example, a cap rate of 25% means a multiple of 4 – the value of the business is four times its assumed earning stream.
 

The expert determines the “cap rate” by engaging in a process called the “build up method,” which considers the “growth” and “discount” rates for the subject company. This is done by taking into consideration various considerations such as to the anticipated growth of the company, current income stream the company generates and comparing it to the risk that the current or future income will be reduced or eliminated. In doing so, the expert considers and utilizes published sources regarding expected returns on investment such as the current 20 year treasury note as of date of valuation along with published guidelines that set forth opinions for industry specific risks.

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

Could the never-ending Yahoo-Alibaba deal finally be close to a handshake? Yes, indeedy.

I’m gonna make you an interim CEO offer you can’t refuse.

And don’t let the door hit you on the way out.

And not cancer, as unfortunate as the timing is for the ousted Yahoo CEO.

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