Schwartz Law Firm 2026-10-12T12:15:03Z https://www.schwartzlawfirmpa.com/feed/atom/ WordPress /wp-content/uploads/sites/1204239/2025/03/cropped-favicon-schwartz512-32x32.png On Behalf of Schwartz Law Firm <![CDATA[When can a shareholder demand corporate records?]]> https://www.schwartzlawfirmpa.com/?p=47146 2026-10-08T13:04:19Z 2026-10-12T12:15:03Z The records every shareholder can demand Every shareholder of a private Minnesota corporation can inspect certain core records without explaining why. In other words, the corportion can't ask the shareholder to explain the request first; simply owning shares gives them this right. These records include the share register, articles of incorporation, bylaws, meeting minutes and basic financial statements.

The records that need a proper purpose

Beyond that basic list, shareholders sometimes want more, like detailed accounting records, contracts or other financial data. For these, the law adds one more step: the shareholder must show a proper purpose or a reason tied to their interest as an owner. Courts have accepted purposes like valuing shares or looking into suspected mismanagement, as long as the shareholder isn't just fishing for information to annoy the corporation. The demand must also describe the records clearly enough that the corporation knows exactly what to hand over.

What happens when a company refuses access

Sometimes a corporation drags its feet or turns the request down flat. When that happens, a shareholder may ask a court to step in. A judge can then order the corporation to comply and even make it pay the shareholder's legal costs. Proving a proper purpose and writing a demand that meets the law's requirements can get tricky, though. That's why many shareholders find it useful to have someone who knows Minnesota corporate law look over their demand letter before they send it. A little guidance early on can save a lot of frustration later.]]> On Behalf of Schwartz Law Firm <![CDATA[What happens when a business partner backs out early?]]> https://www.schwartzlawfirmpa.com/?p=47129 2026-09-09T02:15:31Z 2026-09-15T02:14:17Z Sometimes a business partner tells you, before the work is even due, that they don't plan to hold up their end of the deal. This situation has a name: anticipatory breach. It happens when one side clearly says or shows, ahead of time, that they will not perform the contract. Knowing what this means can help you protect your business and decide what to do next.

What counts as an anticipatory breach

An anticipatory breach happens before the actual deadline for performance arrives. For example, a supplier in Minneapolis signs a contract to deliver goods in three months. If that supplier calls you next week and says they've already sold the goods to someone else, that's a clear signal they won't perform.  This is exactly what courts generally look for — clear, unmistakable words or actions. In other words, vague doubts or a late payment here and there are not enough. The refusal needs to be definite.

What you can do about it

Once a business partner shows they won't perform, Minnesota law gives you options. You don't have to wait around until the original deadline passes. Instead, you can treat the contract as broken right away. This means you may be able to seek damages immediately, find a new partner to fill the gap or try to work out a solution with the other side. Acting quickly can also help limit your losses, which is something courts often expect a business to do anyway.

Why talking to an attorney can help

Anticipatory breach cases can get complicated. It's not always obvious whether words or actions are clear enough to count as a breach, and every contract is written a little differently. An attorney familiar with Minnesota contract law can look at your specific situation, explain your options, and help you understand what evidence you'll need if the matter goes further. Having that kind of guidance early on, rather than after a bigger dispute develops, often makes the whole process feel less overwhelming and more manageable.]]> On Behalf of Schwartz Law Firm <![CDATA[Can directors face personal liability for fiduciary breaches]]> https://www.schwartzlawfirmpa.com/?p=47128 2026-08-06T10:00:53Z 2026-08-11T09:59:42Z When a company suffers losses and someone blames the board, the lawsuit that follows may name individual directors rather than the corporation alone. In this scenario, you might have some questions about what your options are to protect yourself and the business.

When does personal exposure begin?

As a director, you owe the corporation duties of care and loyalty. Care requires you to review relevant information before making a decision, while loyalty requires you to place the company’s interests ahead of your own. Courts normally start with the business judgment rule, which protects decisions made by independent board members who have no conflicts, act in good faith and pursue a legitimate business purpose. A failed merger, investment or expansion does not create liability simply because the outcome later proves disappointing. If a claimant overcomes that protection, the court may apply a stricter standard called entire fairness to a conflicted transaction. You may then need to show that both the decision-making process and financial terms were fair; for other claims, the claimant must link a specific breach to a loss recognized by law.

What protections may apply?

A fiduciary claim does not always place your personal assets at immediate risk. Several protections may limit or cover your financial exposure:
  • Corporate charter limits: Most states, including Minnesota, allow corporations to limit damages against directors for certain breaches of the duty of care. However, these limits generally do not apply to disloyal conduct, bad faith, knowing violations of law or improper personal benefits.
  • Indemnification rights: The bylaws or a separate agreement may require the company to pay your defense costs and cover eligible settlements or judgments.
  • Directors and officers liability insurance: The policy may cover defense costs and other losses when the company cannot or does not indemnify you.
These protections work independently, so one may apply even when another does not. If the parties dispute payment, a judge may review the charter, bylaws, indemnification agreement and insurance policy to decide who bears the expense.

Who may bring a claim forward? 

The following parties may pursue a lawsuit:
  • Shareholders
  • The corporation
  • Minority owners
  • Government regulators
Who files the case shapes the required procedure, the issues you may challenge at the outset and the remedies available. It also determines whether any recovery belongs to the corporation, an individual owner or the government.

How does counsel manage litigation?

Counsel starts by reviewing board minutes, emails and financial reports to learn what information you had before each disputed action. These records may show whether the board reviewed key facts, disclosed conflicts and responded to warnings. Attorneys then compare the facts with state law and company documents, including the charter, bylaws and agreements covering legal costs. They also notify the insurer because late notice may limit coverage. Early in the case, the defense may ask the court to dismiss the lawsuit if the allegations do not support a valid claim. If the case continues, both sides exchange records and question witnesses under oath during discovery. After discovery, attorneys may seek summary judgment, which asks the judge to decide the case without a trial when the key facts are not disputed. If any claims remain, they prepare the evidence and witnesses for trial.  ]]> On Behalf of Schwartz Law Firm <![CDATA[The litigation risks of freezing out a minority owner]]> https://www.schwartzlawfirmpa.com/?p=47124 2026-07-13T04:23:27Z 2026-07-14T12:52:39Z What it means to freeze out a minority owner A freeze-out occurs when majority owners use their control to reduce a minority owner's role in the business. Actions that may become part of a freeze-out dispute include:
  • Excluding the owner from management decisions
  • Limiting the owner's access to financial records
  • Removing the owner from an operating role
  • Changing compensation to benefit majority owners
  • Restricting the owner's role in major company decisions
Courts usually look at the parties' conduct as a whole. One decision may not create liability. A series of decisions, however, may support a legal claim.

Why freeze-out claims lead to litigation

If you limit a minority owner's role, that owner may believe the ownership interest no longer has value. This concern may grow if the owner no longer receives company information, takes part in key decisions or shares in the company's financial benefits. The claims in these cases depend on state law and the type of business entity. Litigation may include allegations of breach of fiduciary duty, minority oppression or other wrongful conduct. Courts usually look at the history between the owners and the events that gave rise to the dispute.

How owner disputes can affect the business

Disputes between owners rarely stay between the owners. Litigation may require employees to gather records, answer discovery requests and appear in court. It may also pull management's attention away from running the business and draw the attention of employees, customers or vendors. For companies with substantial revenue and long-standing business relationships, owner disputes can affect customers, lenders and other stakeholders. What begins as an effort to limit one owner's role may grow into a dispute that affects daily operations and future business plans.]]> On Behalf of Schwartz Law Firm <![CDATA[Can my business partner fire me if I own part of the company?]]> https://www.schwartzlawfirmpa.com/?p=47114 2026-06-17T07:19:34Z 2026-06-11T14:24:16Z When a termination crosses the legal line Even if your company's internal rules give majority owners the power to hire and fire, they cannot use that authority in bad faith. When partners terminate you simply to push you out or force you to sell your shares at a steep discount, it is known as a squeeze-out. This type of termination cuts off your income and removes you from management without a legitimate business reason. Under Minnesota law, this behavior frequently violates your reasonable expectations as a co-owner. Even if the board tries to fix the issue after the fact by retroactively approving the decision, it does not eliminate your legal rights.

What you can do when your partner pushes you out

You do not have to accept a forced exit or an unfair severance package. When your co-owners abuse their position and act against your interests, a court can intervene with several possible remedies:
  • Buyout: A judge can order the company or the remaining owners to buy your shares at a fair value, usually calculated based on the date you file your lawsuit.
  • Back compensation: A court can compel the company to pay the lost wages and benefits that were wrongfully withheld from you.
  • Dissolution: In severe cases, a court may order the full dissolution of the business.
The strength of your case often comes down to how quickly you act and how well you document the events leading up to your termination.

What the right legal support can do for your case

Minority shareholder disputes in Minnesota involve complex legal standards governing unique factual situations. An experienced trial attorney can help you understand which remedies apply to your situation and advocate for everything you put into the business.]]> On Behalf of Schwartz Law Firm <![CDATA[What counts as shareholder oppression in Minnesota?]]> https://www.schwartzlawfirmpa.com/?p=47112 2026-06-26T08:35:30Z 2026-05-13T07:09:11Z The statutory standard Under Minnesota Statute 302A.751, a court can step in when those running a closely held corporation act fraudulently, illegally or in a manner "unfairly prejudicial" to one or more shareholders. That third category is where most oppression cases live. It reaches far broader than fraud. Minnesota law defines a closely held corporation as one with no more than 35 shareholders of record. If your business fits that definition and you hold a minority interest, this statute is the foundation of your rights.

The reasonable expectations test

Minnesota stands out in how courts measure unfair conduct. Judges look at what each shareholder reasonably expected when they bought in. They also look at how those expectations evolved as the relationship unfolded. In a family business or small partnership, those expectations often include a paying job, a real seat at major decisions and a share of the company's success that scales with growth. When the majority defeats those expectations without a legitimate business reason, the conduct can be unfairly prejudicial. That holds true even if the majority broke no clear law. Written agreements matter here. Courts give significant weight to buy-sell agreements, employment contracts and shareholder agreements as evidence of the parties' reasonable expectations, though they are not automatically controlling in every case.

What conduct courts have recognized as oppression

Minnesota courts have found unfair prejudice in many situations, including these:
  • Firing a shareholder-employee from a position they reasonably expected to hold long-term
  • Cutting off distributions or dividends while the majority owners keep drawing salaries or perks
  • Excluding a minority owner from management and major decisions
  • Refusing to share financial records the law entitles the shareholder to inspect
  • Diluting a minority owner's stake through self-dealing transactions
No single act guarantees a winning case, and context matters. A pattern of conduct often carries more weight than any one decision.

What a court can order

Once a shareholder proves oppression, Minnesota courts have broad equitable powers. Buy-outs are the most common remedy in a minority oppression claim. When a court orders one, it typically directs the company or controlling owners to redeem the minority's interest at the statute's "fair value" standard. The Minnesota Supreme Court has held that, absent extraordinary circumstances, courts determine fair value without a marketability discount. That can mean a meaningfully higher number than an oppressive majority might offer privately. Courts still keep discretion to apply discounts when the facts of a case justify them. Courts can also order injunctions to stop ongoing misconduct, return of misappropriated funds or, as a last resort, dissolution of the corporation.

How quickly minority shareholders need to act

Minnesota generally applies a six-year statute of limitations to oppression claims. When that clock starts depends on the specific theory of the case and the facts involved. That question alone can become its own dispute. Evidence ages quickly. Witnesses leave the company, emails get archived and the majority often use the delay to build their own narrative. If you suspect the majority is failing to meet your reasonable expectations, start documenting now. Keep communications, financial records, board materials and a clear timeline of events. Minnesota law gives oppressed minority shareholders a real path to relief through the courts. That path runs through litigation, and litigation runs on provable facts. Acting early gives a judge a stronger record to review.]]> On Behalf of Schwartz Law Firm <![CDATA[Understanding shareholder oppression under Minnesota law]]> https://www.schwartzlawfirmpa.com/?p=47110 2026-04-08T11:00:49Z 2026-04-13T11:00:06Z A minority shareholder in a closely held corporation often finds themselves in a vulnerable position. Unlike a public stock, you cannot simply sell your shares on an open exchange if you feel unhappy with how the company runs. This lack of a market forms the foundation of shareholder oppression laws. Minnesota law protects minority owners from unfairly prejudicial conduct by those in control. This protection goes beyond illegal acts like fraud. Instead, the law focuses on shareholders' reasonable expectations.

What counts as oppressive or unfairly prejudicial?

The courts examine the core understandings the owners had when they started or joined the business. Common examples of oppression include:
  • The freeze-out: Majority owners remove a minority shareholder from the board. Even with at-will employment, courts may find a violation if the job was key to the shareholder's return.
  • Dividend starvation: Majority owners withhold distributions while increasing their own pay.
  • Information blockades: Majority owners deny access to corporate books or financials.
  • Waste of assets: Owners use company funds for personal expenses or non-business luxuries.
These actions often show a clear effort to push out a partner and lower the value of their investment. When the majority benefits itself at the minority's expense, that qualifies as oppression.

What legal remedies are available?

If a court finds the majority acted unfairly, it has broad power to fix the problem. Under Minnesota law, a court can order:
  • A buy-out: The court forces the company or majority owners to buy the minority's shares at fair value. This usually means full value with no minority discount.
  • Injunctions: The court orders the majority to stop harmful actions.
  • Dissolution: In extreme cases, the court orders the company to close and sell its assets.
Courts often prefer a buyout to keep the business running and protect the minority shareholders. This helps the departing owner keep full value. Business breakups can be complex. An attorney can review your situation, gather evidence, and determine if someone violated your rights. They can take action in court to protect your investment and pursue a fair outcome.]]> On Behalf of Schwartz Law Firm <![CDATA[Can minority rights turn into legal liability in Minnesota?]]> https://www.schwartzlawfirmpa.com/?p=47102 2026-03-10T10:01:45Z 2026-03-13T10:00:40Z In Minnesota, minority owners in a business have strong legal rights. These rights protect them from unfair treatment by the people who own most of the company. The law usually protects these small-scale owners from unfair treatment. However, there are rare times when a minority owner's actions can lead to legal trouble.

When blocking a decision causes trouble

The law expects business owners to act in good faith. This means they should act honestly and not try to hurt the company just to help themselves. Most of the time, minority owners have the right to vote against major changes. These changes might include selling the company or taking out a large loan. Problems can start if a minority owner uses their power to "squeeze" the company. For example, imagine a minority owner refuses to sign a needed paper unless the company gives them a private cash payment. If this action hurts the business and serves no real business purpose, a court might find it unfair. Under Minnesota law, a court can step in if an owner's conduct unfairly prejudices the others.

Do minority owners have special duties?

Many people think only the majority owners have fiduciary duties. A fiduciary duty is a legal promise to act in the best interest of the group. In Minnesota, the rules for minority owners depend on the extent of their actual power. If a minority owner acts only as an investor and does not help run the company, they usually do not owe these duties to the other owners. The Minnesota Supreme Court decided this issue in Advanced Communication Design, Inc. v. Follett. However, if a minority owner helps manage the business or has sufficient power to control a major decision, a court might find they owe a duty of loyalty. If they use that power to compete with the company or share secrets, others could sue them.

Staying safe

Business fights can become very expensive. The best way to avoid a lawsuit is to create a clear written agreement. If you are a minority owner, you need to know when your no vote is a right and when others might see it as a breach of fairness. Speaking with a lawyer early can help keep a small disagreement from turning into a long court battle.]]> On Behalf of Schwartz Law Firm <![CDATA[What triggers forced buyouts in shareholder disputes?]]> https://www.schwartzlawfirmpa.com/?p=47100 2026-02-09T08:52:52Z 2026-02-12T08:52:03Z Forced buyouts don’t happen just because shareholders disagree. They happen when the conflict hits a legal threshold. In Iowa, the law outlines specific situations where a court can step in and force one party out. Here’s what typically triggers that kind of litigation.

Shareholder misconduct

Buyouts often start with serious misconduct, such as fraud, embezzlement or using business assets for personal gain. Those actions become even more damaging when they violate legal duties to the company. If you're dealing with a partner whose behavior is damaging the business and you can prove it, the court may treat that as a valid reason to push them out and protect what’s left.

Oppression of minority shareholders

If majority owners shut you out of key decisions, withhold financial records or cut off distributions, that may count as shareholder oppression, and Iowa law gives you the right to take action. When the majority uses their power to isolate or harm a minority owner, the court may view that as grounds for a forced buyout, especially in closely held corporations where there's no easy way to exit.

Deadlock between owners

In 50/50 partnerships or tight ownership groups, total deadlock can grind business operations to a halt. If you and your co-owner can’t agree on major decisions and the business is suffering because of it, the court can step in and order one of you to buy the other out so things can move forward again.

When litigation becomes necessary

If you’ve tried to move forward but your business partner refuses to engage, blocks decisions or takes actions that harm the company, then litigation may be the only tool left to protect your stake. Iowa law offers you a path forward. However, it takes strategy and documentation to make the case. Early advice from someone who knows the system can change the course. You don’t have to stay stuck in a situation that no longer works.]]> On Behalf of Schwartz Law Firm <![CDATA[Common ways business leaders breach their fiduciary duties]]> https://www.schwartzlawfirmpa.com/?p=47098 2026-01-12T19:29:29Z 2026-01-14T10:06:25Z How do business leaders breach their fiduciary duties? Breaches of fiduciary duty occur when business leaders and other people in a fiduciary position break their legal promise to act with their company’s best interests in mind. Being wary of when these breaches might occur can save a company from suffering huge losses.

Common ways leaders breach fiduciary duties

Typically, when a business leader breaches their duty to the company, they do it to benefit themselves, their families and other businesses they may have ties to. There are many ways this can be achieved, including:
  • Self-dealing: Making decisions that benefit the leader instead of the company
  • Misusing funds: Stealing and using company money and assets for personal gain
  • Breaching trust: Sharing private information, revealing trade secrets, leaking client lists and taking advantage of information learned through a business leader’s position
  • Working with competitors: Owning or working for a competitor while keeping a high-level position in a company
  • Neglect: Making poor decisions without properly checking the risks
  • Lack of transparency: Hiding factors that can affect business decisions
  • Malicious intentions: Making choices intended to harm the company
In Minnesota, business leaders caught breaching their duties are liable to pay for any losses. The court may also require them to give up any profit they have made using misused funds or assets. They are also likely to lose their position within the company or face criminal charges.

Preventing breaches of fiduciary duty

It can be difficult to understand shareholder disputes, and identifying when a business leader potentially breaches their duties can be challenging without guidance from a legal professional.  ]]>