Common Shareholder Disputes – Compensation and Contribution Differences

business executive arguing with his boss at meeting over latest sales figures with others watching

Unfortunately, shareholder disputes in a corporation occur more frequently than one would expect. Sometimes shareholders may not agree with the future direction of the company. Maybe some of the minority shareholders are disgruntled because they believe their voices aren’t being heard.

One of the most common issues regarding shareholder disputes involves miscommunication between contribution and compensation. In this situation, some shareholders believe that they are not being compensated based on their true value.

Shareholder disputes are generally resolved, but hiring Yardley PA business lawyers is your best option if things become complicated. Here’s a closer look.

Shareholder Compensation

Salary and dividends are the primary ways that shareholders are compensated. Salaries are paid based on net income, while dividends are calculated through the projected company earnings. The size of the dividend is based on the number of shares the shareholder has.

Dividends are not necessarily considered a working wage. Because shareholders who work for the company are considered employees, they may become disgruntled at their lack of a fair wage. The corporation may seek to compensate shareholders through bonuses.

Shareholder Contribution

Contributed capital is the amount of money that shareholders in a corporation pay to acquire new shares of stock. In most cases, shareholders purchase new stocks with cash, but they can also use real estate and other assets to obtain the shares. When the stock originally enters the market, it is assigned a par value.

Contributed capital is often viewed unfavorably by existing shareholders. New investors joining the corporation complicate the ownership percentage and the existing shareholder’s total capital value. Disgruntled existing shareholders may make their displeasure known, causing shareholder disputes.

Contact Olen Law Office when you need a shareholder dispute lawyer. Fighting against large corporations may seem like a situation you can’t win. That’s where we come in to fight for you and make sure that you receive the compensation you are entitled to.

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