When corporate management requests or obtains legal advice from corporate counsel, management expects those communications to be protected from disclosure by the attorney-client privilege, and usually they are. But there are exceptions.
Directors owe fiduciary duties to the company. To make informed decisions and satisfy those fiduciary duties, directors generally have broad access to the company’s books and records, with a few exceptions.
Those with ownership stakes in privately held businesses, partnerships, or family offices need to closely collaborate with and trust others. When disagreements and disputes over rights and responsibilities arise, individual emotions and personalities can complicate matters.
A recent court ruling related to Donald Trump’s attempts to overturn the 2020 presidential election serves as an evergreen reminder that the attorney-client privilege and work product doctrine do not insulate documents and communications created in furtherance of a crime or fraud from disclosure.
Ownership disputes often arise from a common scenario: a few friends start an LLC together. The friends each take an ownership interest in the LLC and decide to organize their LLC under Delaware law. \
When acquiring shares in a corporation, minority shareholders often evaluate the profitability of the corporation, the value of their shares, and what protections are in place to shield them from wrongdoing at the hands of the controlling shareholders.
Minority owners of a business face unique challenges. With limited or no control over the management and governance of a business, minority owners can be unfairly left in the cold or squeezed out. However, deliberate preparation and negotiation at the initial stages of the business can set up minority owners with the necessary tools to eliminate or reduce many of these difficulties and even avoid future conflict.
Unlike businesses with a single controlling owner or several owners, a 50/50 business by its very nature is ripe for disagreement between its owners. Owners of a 50/50 business will need to proactively consider how to handle disagreements when setting up their business venture and drafting their operating agreement, shareholders agreement, or partnership agreement.