As we have discussed on a number of occasions, the ability to control imposes fiduciary duties of loyalty and care on whoever, or whatever, exercises that control. It is a fundamental principle of business law in many states, including New Jersey and New York, that one sees frequently in... read more
An equitable accounting is a cause of action that requires those in control of the finances of a closely held business to account for their use of the money. An accounting a two-stage process. First the controlling party must render an account of how it used the assets of... read more
There is no statutory right to receive a distribution of profits from a limited liability company before it dissolves and winds up its affairs. Distributions before then are discretionary. Profit distributions are in the discretion of the majority members or commonly in the discretion of the managers of the... read more
A ‘passive’ member with no rights or responsibilities in the management of a limited liability company cannot be held liable for refusing to participate in a PPP loan application. Dissociated LLC members with no management rights can withhold their voluntary consent to proposed actions. The waiver of fiduciary duties... read more
A New Jersey Court conducing the valuation of a business may use any technique or method generally acceptable in the financial community. The application of a minority discount is a question of law, but likely will be based on the factual determinations of the court about the culpability of... read more
The effective date of an LLC member’s expulsion may be a critical issue in business divorce litigation and may be tied to critical events or the litigation. Courts will look at the facts and circumstances of the case before determining the effective date, but are often guided by the... read more
Accounting firm is compelled to repurchase the equity of departing shareholder who moved practice to competitor firm. A shareholder agreement that is integrated and intended to be the parties’ complete agreement may preclude a claim for breach of corporate by-laws. A shareholder in an accounting firm organized as a... read more
Managers of a limited liability company owe to the company fiduciary duties of loyalty and care, must act in good faith, and refrain from reckless or unlawful conduct. A member who seeks information about a manager-managed limited liability company must state the purpose for the request under the Uniform... read more
A limited liability company member withdraws by voluntary dissociation, which occurs when the company has notice of his ‘express will” to withdraw. Voluntary dissociation terminates management rights, but not economic rights. A court may refuse relief on a claim when the plaintiff has acted with unclean hands with regard... read more
The controlling shareholders of a corporation owe fiduciary duties to the minority shareholders by virtue of their ability to control the affairs of the company. Even when a merger complies with statutory requirements, where it benefits the controlling shareholders and does not have an apparent business purpose, it must... read more
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