Page 7 - Jupiter West - April '23
P. 7
Jupiter West, Page 7
Considerations Before Becoming A Minority Owner
Submitted by Anné • The majority owners unreasonably restrict the sale or Call our office today at (561) 694-7827, Elder & Estate
Desormier-Cartwright, Esq. transfer of minority membership interests Planning Attorneys PA, 480 Maplewood Drive, Suite 3,
Becoming a minority • The majority owners deny a minority owner’s access to Jupiter, FL 33458.
owner in a business can financial records The content of this article is general and should not be relied
give you the opportunity • The minority owner is fired as a “squeeze play” to upon without review of your specific circumstances by competent
to help a business grow eliminate their ownership interest legal counsel. Reliance on the information herein is at your
and share in its success Again, majority owners have a lot of leeway in how they own risk, as it expresses no opinion by the firm on your specific
without the management operate the business, and not all of these examples will rise circumstances or legal needs. An attorney client relationship is
responsibilities. Minority to the level of oppression in every case. To prove oppression, not created through the information provided herein.
owners may be brought in it may be necessary to show that the actions of the majority To comply with the U.S. Treasury regulations, we must
to facilitate growth, perform owner toward the minority owner not only interfered with inform you that (i) any U.S. federal tax advice contained in
acquisitions, or achieve the latter’s interests, but also were intentional. Making this this newsletter was not intended or written to be used, and
other strategic goals and often provide valuable expertise in determination requires a case-by-case analysis in accordance cannot be used, by any person for the purpose of avoiding
addition to the capital investment they make in the business. with the relevant facts and state law. U.S. federal tax penalties that may be imposed on such
However, because a minority owner owns less than 50 A successful oppression lawsuit may result in the payment person and (ii) each taxpayer should seek advice from their
percent of the business and state business laws typically give of monetary damages, a court-ordered buyout of the oppressed tax advisor based on the taxpayer’s particular circumstances.
minority owners limited rights, the minority owner may be minority owner, or equitable relief, such as requiring the
at the mercy of the majority owners. If a conflict arises and company to cease their specific oppressive actions.
the minority owner’s rights are infringed, they can file a It may be that a minority owner has their eyes only on Identifying Early
Negotiating Stronger Minority Owner Protections
lawsuit. Conflicts can also be prevented through a written
agreement that modifies state law and more strongly protects financial gain. But that goal can be in jeopardy if the majority
owners find ways to spend and reinvest money that would
the minority owner against oppressive conduct. otherwise be distributed to the minority owner as profits. Reading Struggles
Minority Owner Rights
Most companies have a small number of private owners and Profits from a business sale cannot be guaranteed, either, if
do not publicly issue ownership interests. Business entities such the sale is structured in a way that prevents minority owner By Jim Forgan, Ph.D.,
as corporations, partnerships, and limited liability companies payouts. Minority owners also cannot count on the ability School Psychologist
(LLCs) may have this type of ownership structure. A minority to sell their ownership interest, since state law often limits Ask any elementary
owner is an owner who owns less than 50 percent of the the right to force a company buyout. school teacher and
business. They may, for example, invest $50,000 in a company However, minority owners do not have to accept the limited they will confirm that
in exchange for a 20 percent interest. Because a minority owner default rights they have under state statutes. An operating many kids struggle with
does not have a controlling stake in the business, however, agreement and a buy-sell agreement can include provisions reading. School staff do
they have fewer rights than majority owners. Generally, in that provide additional protections for minority owners. their best to help with
the absence of a written agreement that expands their rights, a Prior to obtaining a minority stake in a company, limited resources but
minority owner is only entitled to the following: prospective owners should consider their expectations about many take a wait and see
• The right to vote on certain matters, such as electing the the following types of issues: approach. Waiting does
board of directors (corporation) or managers (LLC) • Level of involvement in day-to-day company management not benefit your child. As
• The right to inspect company books and financial records • Decision-making authority regarding company changes, an astute parent or family member, follow your instinct to
• The right to receive dividends from the business (if including the sale of the business or a merger or acquisition determine the root cause of your child’s reading struggle.
there is a distribution of profits) and proceeds from the sale • Equity payments from company operations Students who struggle with reading in the early grades
or dissolution of the business • The ability to sell an ownership interest or be bought will eventually struggle with all academic areas. This occurs
• The right to sue majority owners for breach of out by the other owners because the curriculum in upper grades relies more and
fiduciary duty • Distributions from the sale or dissolution of the company more on independent reading skills. In fact, research studies
Outside of these basic rights, minority owners may find that, Initial expectations can be set during a discussion with have shown that it is important to assess and remediate a
despite their investment in the company, they have little or no business partners, but handshake agreements do not go far child’s reading skills at an early age. Researcher Joseph
ability to control the direction of the company and no right to enough. The agreed-upon understanding between the minority Torgesen and colleagues documented that more than 80
participate in daily decisions. If the minority owner is also a and majority owners should be in writing and signed. percent of students who were poor readers at the end of
company employee, they do not have the right to continued Absent a written agreement that solidifies their rights, a first grade still performed below average at the beginning
employment if they are fired. They also lack the right to demand minority owner relies on the majority owners’ good faith. of third grade. Don’t let your child become a reading failure
distributions if the majority owner does not make them. Should that faith prove to be misplaced, a minority interest statistic. Specialized reading help is available when you
Oppression Of Minority Rights holder may realize — too late — how vulnerable they are have the right knowledge.
The rights of a minority owner, while limited, can be to the majority. The keys to helping your child include following your
enforced based on state statutes that provide protections Protect Yourself As A Minority Business Owner hunch, seeking an expert to test your child to determine
aimed at preventing “minority shareholder oppression.” In Trust is important, but trust that is not backed up by written which reading program is best for your child’s needs, and
addition, although majority owners have nearly unlimited agreements will not get you very far if trouble arises. Some using the program with an experienced professional. The
discretion over how to run the company, they still have a legal of these problems may not be anticipated until they arise. correct reading program can help save time, stress, and
duty — known as a fiduciary duty — to not place their own Others can leave you grasping at legal straws. create life changing gains within your child. We encourage
interests above the interests of the company and its minority As a minority business owner, you do not have to accept you not to accept a one-size-fits-all reading approach
owners. However, depending on state law, the majority owner the limited protections that state statutes offer. It is fully offered by many schools.
may owe fiduciary duties only to the company and not to a within your power to negotiate more favorable terms as a Since Dr. Forgan is also a Susan Barton certified
minority owner. condition of taking on a minority owner role. dyslexia tester, we use unique tests that others don’t have.
Minority oppression may occur in situations such as the Before investing your time and money in a business Within a few weeks we give you answers and tell you the
following: venture, it is prudent to consult a lawyer. Our business best reading program we believe will help your child.
• The majority owner refuses to make profit distributions lawyers can help you solidify your expectations with legally Call to discuss your child as we test students ages 5.5
when the company is profitable enforceable documents. If you already have agreements in through college for dyslexia, learning disabilities, ADHD,
• The majority owners are excessively compensated place, we can also advise you of your rights to bring a breach depression, anxiety, and other processing disorders. Visit
• The majority owners dilute the voting rights or of contract or minority oppression action. To discuss your JimForgan.com or call (561) 625-4125.
> edwardjones.com | Member SIPC
ownership of minority owners needs, please contact our office and set up an appointment.
> edwardjones.com | Member SIPC
NEED A/C? We’ve Got You Covered!
> edwardjones.com | Member SIPC > edwardjones.com | Member SIPC
Dreaming up the
Dreaming up the
ideal retirement
Dreaming up the Dreaming up the “WE SHOW
ideal retirement
ideal retirement ideal retirement
is your job.
is your job. UP!”
is your job.
Helping you get
Helping you get is your job.
there is ours.
there is ours. Helping you get
Helping you get
We’re excited to there is ours.
We’re excited to
there is ours.
hear from you. We’re excited to
hear from you.
hear from you.
We’re excited to Sally S Stahl, AAMS™
hear from you. Financial Advisor Call Today for a FREE estimate!
Sally S Stahl, AAMS™
1851 W Indiantown Rd Ste 106 Sally S Stahl, AAMS™ 561.575.2173
Jupiter, FL 33458 Financial Advisor 231 Jupiter St., Jupiter, FL
Financial Advisor
561-748-7600
1851 W Indiantown Rd Ste 106 www.MiklosAir.com
1851 W Indiantown Rd Ste 106
Jupiter, FL 33458 Jupiter, FL 33458
561-748-7600 561-748-7600
IRT-1848H-A Sally S Stahl, AAMS™
Financial Advisor
IRT-1848H-A 1851 W Indiantown Rd Ste 106
IRT-1848H-A
Jupiter, FL 33458
561-748-7600
IRT-1848H-A