{"id":2911,"date":"2017-06-28T09:36:33","date_gmt":"2017-06-28T13:36:33","guid":{"rendered":"https:\/\/www.lindabury.com\/firm\/?p=2911"},"modified":"2019-12-23T18:17:57","modified_gmt":"2019-12-23T23:17:57","slug":"corporate-deadlock-shareholders-seek-courts-assistance-forcing-buy-outs","status":"publish","type":"post","link":"https:\/\/www.lindabury.com\/firm\/insights\/corporate-deadlock-shareholders-seek-courts-assistance-forcing-buy-outs.html","title":{"rendered":"Corporate Deadlock &#8211; When Shareholders Seek the Courts&#8217; Assistance in Forcing Buy-outs"},"content":{"rendered":"<p>Corporate deadlock is often cited as a reason why the court should invoke its powers and order the sale of one shareholder\u2019s stock in minority shareholder litigation. While deadlock is a legitimate reason to bring a lawsuit seeking the court\u2019s intervention, it is not a magic bullet that will automatically lead to the court ordering a buyout of one or more shareholders.<\/p>\n<p>Deadlock is defined under the New Jersey Business Corporations Act and can be found under one of two circumstances. Deadlock can be found to exist when \u201cthe shareholders are so divided that they have not been able, for two consecutive meetings, to elect successors to directors whose terms have expired or would have expired if successors had been elected and qualified.\u201d N.J.S.A. 14(a):12-7(1). The second manner in which deadlock may exist is if \u201cthe directors or other persons having management authority are unable to effect action on one or more substantial matters respecting the management of the company\u2019s business.\u201d N.J.S.A. 14(A):12-7(1).<\/p>\n<p>The first deadlock provision may seem like an easy one to satisfy in closely held companies since many small companies do not hold formal shareholder meetings as required under the statute. The owners of small closely held companies are so focused on running the business that they forget about the formal requirements. Instead, since the shareholders in such companies generally work together closely and see each other practically every day, they make management decisions informally as necessary to operate the business and without formal meetings or corporate resolutions.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.lindabury.com\/firm\/insights\/corporate-deadlock-shareholders-seek-courts-assistance-forcing-buy-outs.html\"  title=\"Continue Reading Corporate Deadlock &#8211; When Shareholders Seek the Courts&#8217; Assistance in Forcing Buy-outs\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Corporate deadlock is often cited as a reason why the court should invoke its powers and order the sale of one shareholder\u2019s stock in minority shareholder litigation. While deadlock is a legitimate reason to bring a lawsuit seeking the court\u2019s intervention, it is not a magic bullet that will automatically lead to the court ordering [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[245,99,65,248],"tags":[],"coauthors":[173],"class_list":["post-2911","post","type-post","status-publish","format-standard","hentry","category-corporate-ma-insights","category-pierce","category-insights","category-litigation-insights"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Corporate Deadlock - When Shareholders Seek the Courts&#039; Assistance in Forcing Buy-outs &#8212; June 28, 2017 &#8212; Lindabury, McCormick, Estabrook &amp; Cooper, P.C. 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Firm News &amp; Events","og_description":"Corporate deadlock is often cited as a reason why the court should invoke its powers and order the sale of one shareholder\u2019s stock in minority shareholder","og_url":"https:\/\/www.lindabury.com\/firm\/insights\/corporate-deadlock-shareholders-seek-courts-assistance-forcing-buy-outs.html","og_site_name":"Lindabury, McCormick, Estabrook &amp; Cooper, P.C. Firm News &amp; Events","article_published_time":"2017-06-28T13:36:33+00:00","article_modified_time":"2019-12-23T23:17:57+00:00","author":"David R. Pierce","twitter_card":"summary_large_image","twitter_misc":{"Written by":"David R. 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