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Q: Company Shareholder problems. ( Answered 5 out of 5 stars,   0 Comments )
Subject: Company Shareholder problems.
Category: Business and Money > Small Businesses
Asked by: industry-ga
List Price: $10.00
Posted: 09 Jul 2004 01:03 PDT
Expires: 08 Aug 2004 01:03 PDT
Question ID: 371734
I am a non active share holder in a company that wants to buy my
shares. I was not sure what my shares were worth so the business was
evaluated by a third party. The active share holders set up the third
party with all the companys info for the evaluation. I found out that
the active shareholders did not supply the third party with all the
companys financal info. This was done to show that the companys value
was less and therefore my shares are worth a lot less. So my question
is that is there any legal action I can take and what I should do
about it?
Subject: Re: Company Shareholder problems.
Answered By: taxmama-ga on 13 Jul 2004 22:24 PDT
Rated:5 out of 5 stars
Dear Industry, 

So far, no crime has been committed. 
You haven't been cheated because you haven't yet sold your shares.

As I see it, you have a few options:

Option 1) Ask for the complete information and take it to the appraiser for a 
correct appraisal. 

Option 2) Forget all that and decide just how much money you want for 
your shares - and ask for it. 


Option 3) Get an attorney and sue. 

If you take the first action and they refuse to release the
documents, you're pretty much automatically stuck with option
3, aren't you? 

If you take the first action and they do provide the full financial
statements, you can also add the cost of the appraisal (if you pay
for the second one) to the price of your shares.

If you take option two, and just tell them what you really want, 
they can pay you - or you can keep your shares. If you keep your
shares, they'll have a hard time growing the way they want to, 
won't they? 

On the other hand, if you try to block them, there's nothing to 
prevent them opening a whole new company and starting over without
you. You'd have an expensive battle to prove it was really the same
company, but you could fight it and win. (Which means, once again, 
you end up with option 3. Sigh) 

You know your partners or co-shareholders best. Which option would 
work best with them so you all win?

If you are sure they are going to rip you off? 

Proceed straight to step three. Hire an attorney - and do not sell
until you negotiate a reasonable settlement. 

When you do this, take into account the tens of thousands of dollars
you will pay the attorney - and deduct it from your settlement. Is it 
still worth it? And the negative emotions and debilitating anger that
prevent you from doing other productive things to make a living?
And that ruins your time with your family and friends?

Sorry. I've seen people win cases like these, after many years. 
But the emotional costs were so high, it took years to recover. 

So, think carefully before you sue. See if you can just work it
out through negotiations.

Good luck. 

Your TaxMama-ga
industry-ga rated this answer:5 out of 5 stars and gave an additional tip of: $2.00
Thank you!!

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