In the corporate world, majority shareholders have much more control over a business than minority shareholders. However, although minority shareholders may have no direct control, they are still owners of a part of the company.
Occasionally, a minority shareholder may become an inconvenient factor in a corporation due to disruptive influence, lack of fit for the role, etc. However, is it possible to remove a minority shareholder from a company in Florida? Keep reading on to find out.
How Can a Minority Shareholder be Removed from a Company in Florida? – The Essentials
In Florida, there is a set of key factors involved in removing a minority shareholder. Regardless of the corporation’s segment, removing a minority shareholder depends on many different factors.
The first step is pouring over the shareholders’ agreement. This document outlines the rights and responsibilities of each shareholder involved in the company. Ideally, the shareholders’ agreement should provide the proceedings to remove a shareholder.
This way, assuming the corporation has a shareholders’ agreement providing what to do to remove a minority shareholder, all the parties involved must abided by the terms and provisions contained in the document.
Typically, most corporations tend to address this type of situation by using a buyout provision, which are contractual clauses that grant majority shareholders the legal right to buy out a minority shareholder at a pre-determined price.
In such a case, the majority shareholder(s) may buy out the minority’s share of the stock in the company, which would lead the party to vacate.
What if There Are Not Related Provisions in the Shareholders’ Agreement?
Nevertheless, some companies fail when drafting the shareholders’ agreement, as they do not provide anything about shareholder removal.
Trying to remove a minority shareholder from a company when there are no clear provisions in the business’s agreement is extremely complex. Typically, the parties involved tend to sit down and find a way to settle the case amicably.
Removing a Minority Shareholder from a Company in Florida – Resolving Business Disputes Between Shareholders
All shareholders involved in a corporate business tend to share some common interests – regardless of the fact they are either majority or minority owners. Consequently, all parties may suffer in case of unsettled disputes or demanding litigations.
Ideally, settlement is the solution for most cases involving the removal of a minority shareholder. A Florida business attorney can make a real difference in the process, especially when selecting the ideal resolution method.
Additionally, even if there is no provision stating the majority shareholder(s) have the right to buy out a minority shareholder, it is still possible to negotiate a new agreement by which both parties involved consent to the sale.
Minority Shareholder Protection in Florida
In Florida, state law grants minority shareholders a significant level of protection in certain situations.
For instance, Florida Statutes § 607.1602 provides that “a shareholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation’s principal office, any of the records of the corporation.”
Also, the Statute provides that access to corporate records can happen only “if the shareholder gives the corporation written notice of the shareholder’s demand at least five business days before the date on which the shareholder wishes to inspect and copy.”
Ultimately, it is impossible to “force” a minority shareholder out of a corporation, as the injured party could claim shareholder oppression.
Removing a Minority Shareholder from a Company in Florida – Work with Jurado and Farshchian, P.L.
Removing a minority shareholder from a company is a complex task, which requires professional guidance. Contact Attorney Romy B. Jurado today by calling (305) 921-0440 or emailing Romy@jflawfirm.com to schedule a consultation.