QUESTION
I believe I have a case of shareholder oppresion and I'd like to know what steps I should take to move toward legal action
Asked on Sep 10th, 2013 on Business Law - Illinois
More details to this question:
I own preferred stock in an LLC that I believe has been making payments to other shareholders. The CEO of the company does not communicate with me. I try to get him on the phone or set up a meeting and he always has an excuse not to talk to me. I have asked for the tax statements for last year to see where the money is going and he claims to have filed an extension so I cannot see the books of accounting. What can I do to force him to give me answers? I feel as long as I dont have a lawyer or go through the proper channels he will never willingly give me any information about what he is doing with my money.
1 ANSWER
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If you have an ownership interest in an LLC, you are a member (as opposed to a shareholder). Your rights are determined under the Illinois Limited Liability Company Act. As a member, you have a right to access the corporate books. That is the place to start. If he is not responding to you, you should contact an attorney and have an attorney right a stern letter, informing him of your rights as a member under the law and of the consequences of not providing access.
Based on the few facts you have given, it is uncertain whether you might have an "oppression" claim. An option short of an oppression claim would be an action to require an accounting. One word of caution is in order: depending on the provisions in the operating agreement (if there is one), a suit against fellow members could trigger the dissolution of the LLC. You will want to explore your rights and the ramifications of taking action carefully with an attorney before you draw any lines in the sand.
Answered on Sep 10th, 2013 at 2:09 PM