Take a look at this recent U.S. Court of Appeals-6th Circuit case, where a board of directors takes heat for failing to comply with legal notice requirements. The shareholders sued the board and won! The board failed to disclose specifics about an important proposal in a required notice for an upcoming board meeting.
Why is this important to you? First, what you are required to do by law in business decision making is determined by the legal structure you choose. Certain types of entities have more legal formalities than others (in this case, a corporation). Next, lawsuits like this one can have a substantial impact on your business operations. Failure to comply with legal formalities can result in a number of unfavorable scenarios, including defending a derivative action- similar to the one in this case. This will cost time, money and other resources. For this reason, understanding the laws that govern your particular business structure is extremely important.
Please don’t think this only applies to large corporations! No matter how big or small your business is, not seeking the requisite legal advice as you navigate your business operations can have a substantial impact. Contact C&G to assist you today!
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