Austin, TX commercial litigation attorney Walter V. Williams talks about the current trends he sees in shareholder lawsuits. He explains that, unfortunately, the trend has been toward more of this kind of litigation. The problem, he says, stems largely from a 2014 decision by the Texas Supreme Court that significantly narrowed the legal claims available to minority shareholders. That same decision also restricted the ability of companies to buy out minority shareholders, leaving such matters primarily dependent on the specific documentation and agreements between the company and its shareholders—such as operating agreements or corporate bylaws.

The issue, he notes, is that those documents often fail to include crucial provisions outlining whether the company can buy a shareholder’s interest, whether a shareholder can sell, and under what terms those transactions might occur. Without those contractual protections, both the shareholder and the company are left with few options.

As a result, he says, disputes in this area—often referred to collectively as “business divorce” cases—have become increasingly common. With limited legal remedies and inadequate agreements, these conflicts frequently end up in litigation, and he’s seen more and more of them over the years.