Can you sue stockholders?
Specifically, there are certain circumstances that will permit a shareholder to sue their own company. For example, a corporate shareholder may sue a corporation when any of its directors or officers violate a fiduciary duty or conduct various other illegal activities like defrauding investors.
Can stockholders be sued individually?
Just like a C corporation, an S corporation is a separate legal entity from its owners. As such, the owners enjoy the limited liability protection of a corporation. Under certain circumstances, however, individual shareholders can be sued personally even if they operate as an S corporation.
Shareholders are generally not allowed to sue directors and controlling shareholders of the company due to the proper plaintiff rule, as the company should be the plaintiff instead.
A cause of action represents a legal wrong or a reason to file a lawsuit. If a company has a cause of action, a shareholder can file a derivative lawsuit. A shareholder may also sue to enforce her own claim against the corporation, the directors, the officers or a majority of shareholders in a direct action.
What are reasons to sue a company?
Top Reasons to Sue an Employer
- Illegal Termination. While employment may be terminated at any time in an at-will employment state, there are still ways an employer may illegally terminate an employee. …
- Deducting Pay. …
- Personal Injuries. …
- Employee Discrimination. …
- Sexual and Workplace Harassment. …
- Retaliation. …
Who can sue and be sued?
A civil lawsuit can be brought against a person, business, organization or even a government that has caused you injury or financial loss. In cases of negligence, anyone can be sued, including a minor. However, it is unlikely that a minor will have the necessary funds to compensate for the damages they may have caused.
When can directors be held personally liable?
If you have signed a director’s personal guarantee on any loan, lease or contract, you will be made personally liable for the debt if the company is unable to pay. Typically, personal guarantees are required on loans for business vehicles or equipment, a credit line from a bank, or a commercial lease.
Can personal creditors go after a corporation?
When you form a corporation or an LLC it becomes a separate legal entity apart from its owners. … If the corporation or LLC cannot pay its debts, creditors can normally only go after the assets owned by the company and not the personal assets of the owners.
Can a CEO be held personally liable?
Even when piercing is not warranted, CEOs can still face personal liability if they commit certain wrongful acts in their corporate capacity. CEOs can also face criminal culpability for crimes committed in their corporate capacity (including crimes purportedly committed for or in the name of the company).
That much is fairly straightforward. But take care, since if the director is also an employee you will need to terminate their employment. A director who has been dismissed may have a claim for unfair dismissal. The director will continue to own the shares and will continue to be entitled to their share of dividends.
Can the shareholders overrule the board of directors? … Shareholders can take legal action if they feel the directors are acting improperly. Minority shareholders can take legal action if they feel their rights are being unfairly prejudiced.
A shareholder is not liable for the debts or other obligations of the company except to the extent of any commitment made to buy shares.