Have you heard of minority shareholder rights?

These are the rights enshrined in company law and have been tested in the courts.  What are they?  In simple terms, whether or not a person owns or does not own voting shares, that shareholder has rights whereby the majority may not make decisions that would be prejudicial to the rights or entitlement of that minority shareholder.  In Canada, this is described more fully and in much clearer language that I could do in the link below:

Minority rights article link

This means that you as the owner, should not introduce new shareholders, whether or not family members, to a company without

1. fully understanding the governance implications, and
2. the rights of these new shareholders.  

If you take an action that would be considered to have harmed the minority shareholders, and this could be as routine as paying a “bonus to yourself, you may face a minority oppression lawsuit.  These type of lawsuits are expensive and can be prolonged because proof of a minority oppression is a complex and difficult to establish matter at law.

Learn, think, apply!