When you own a business with others disputes can occur.  Following corporate procedures can help avoid disputes or can help resolve disputes.  Many disputes result from a lack of communication.  Nobody likes meetings but meetings allow everyone to be part of the process and help keep everyone informed.  Effective meetings have an agenda and purpose so that they are worthwhile and a good use of time.  

Value of the Business

A common issue that can arise between owners is the value of the business.  If one of the owners wants to leave the business, they naturally tend to place a greater value on the business than do the other owners.  To help avoid this problem every business should have a BuySell Agreement that values the business before anyone knows whether they will be the seller or buyer.  The owners should annually revisit the valuation issue to make adjustments to reflect changes that have occurred over the past year.  The BuySell Agreement should not only spell out what the value of the business is or a formula to determine the value, it should also set out what triggers the agreement and how the value is paid out.  

Direction of the Business

Another common area of dispute is the direction of the business.  Disagreements can occur as to how the business is being run.  The structure of the business is determined by how it was set-up.  While one or more of the owners may in fact run the business they have to make sure that they follow the rules of their Business Entity or they may find out that their actions were not authorized.

Notice, Meeting, Vote and Resolutions

Your Business Entity organizational documents will set out when meetings must be held and what notice must be given.  These rules have to be followed and documents.  The meeting itself must follow the rules of your specific /Business Entity.  There must be enough owners present to form a quorum, votes must be taken and the rules will set out whether you need a majority or more of the votes to approve the action.  If the vote succeeds, there needs to be a resolution documenting that result.  All of these documents should be retained in your Business Entity Book.

 If you need help setting up or revising your Business Entities, documenting your Business Entity actions or resolving ownership disputes, contact one of the attorneys of Nash & Lodge at nash@nashandlodge.com or call 763.862.6100.