Business Litigation: Issues Arising After Shareholder Departure
.Some of the key and most damaging issues to arise for a business are issues of Antitrust, in regards to Trade Regulations and distributions, the rights and ownership of technology considered to be intellectual property and unfair competition, misappropriation of trade secrets and other business wares; all of which can occur separately or simultaneously, and as it is up to the remaining shareholders to discover if these actions were justified.
Antitrust is a competitive law that prohibits the hindrance by any company or individual on the free market for the sole purpose of individual profit. It does not prohibit individual profit if such profit occurs without interference by the benefactor of natural competition. This also applies to the Trade of public companies, and the distribution of stock to corporate officers and investors, by which neither shall profit at the loss of the other.
Intellectual Property and Ownership of that property can also cause issues on departure or dissolution of a business, as a dispute may arise, which can slow an existing business in response to its consumers or investors. Being aware of the relevance and value of that Intellectual Property can help the consumer and investor to be aware of the length and entanglement of the issues.
Unfair Competition, Misappropriation of Trade Secrets and other business wares, can also be an issue when the officers of the dissolute business or the departed officers are discovered in the market with a new concept built on those wares or Trade Secrets. It is not in violation of these regulations if the process is changed significantly, while the outcome may be the same; it is only when the process is an attempt to hinder the competitive strength of another company or individual.
For many, investing is more then a paper agreement, it is a belief and faith in the individuals who comprise the business which is being invested, and discovering issues that arise after a shareholder’s departure can not only be costly, but damaging to the remaining shareholders’ confidence. Having a seemingly successful company dissolve, or commanding leaders depart then a short while later open a competing business can bring many questions to light.
In a perfect world the action has taken place solely because of the volume of business, too little to support the former business, or too great to contain individuals to a single company, unfortunately that is not a world that we live in and great care has to be executed by both those departing shareholders, and the remaining shareholders to protect themselves and the business. It is up to the shareholder to be diligent in discovery of the cause and reason for the dissolution of a business or the departure of key individuals and to be watchful that these individuals do not show up later trying to exploit the market and the remaining shareholders to their own gains.