Texas business litigation lawyers assist small businesses with breach of fiduciary duty lawsuits

In the past few years, Texas business litigation lawyers have assisted small businesses that have lost millions of dollars due to controlling shareholders, board of director members and, in some cases, key management employees, placed in a position of trust and confidence, who misappropriate monies, contracts, opportunities, and assets from the company, and steal company trade secrets for their own benefit. Texas recognizes that controlling shareholders may owe a minority shareholder a fiduciary duty, just as a member of the Board of Directors, and, in some cases, a senior management employee of the company, may owe the business the same duty. A fiduciary duty is one of the highest duties one person owes another. In a company, these duties are typically (1) the duty of loyalty; (2) the duty of care; and (a) duty of disclosure. Shareholders have options to recover damages when a controlling shareholder, a member of the board of directors, or a key employee has acted in a manner that illegally competes with the business, takes a business opportunity for him or herself, or deprive the business of its confidential and proprietary information. These fiduciary duties owed to small businesses in Texas are discussed below.

The Duty of Loyalty

Controlling shareholder, directors, and certain key employees cannot act in their own interest to the detriment of the company or the minority shareholders. If a controlling shareholder, director, or key employee is in the process of taking a company benefit for himself, the business must consult its business lawyers, and act quickly. The remedies for breach of the duty of loyalty are injunction and damages. If a small business believes that a former key employee, board member, or controlling shareholder is taking a company benefit – customers, contracts, etc. – for him or herself, at the expense of the small business, it could be evidence of a breach of that person’s duty of loyalty. In such circumstances, we urge small businesses to contact the Vethan Law Firm, P.C., Texas business attorneys who focus on business litigation and fiduciary duty disputes.

The Duty of Care

The standard for judging the soundness of business decisions made by directors is low. Even if the decision made was a bad decision, it will not be a breach of the duty of care unless there was no rational basis for the decision. Directors are often protected from personal liability for their decision-making through the corporate charter.

The Duty of Disclosure

This is a relatively new duty that has arisen through common law in the past 20 years. This is the duty of the directors to disclose pertinent facts and circumstances when asking shareholders to vote on matters. It is also their duty to disclose the shareholders actions involving conflicts of interest.

The Vethan Law Firm, PC

The Vethan Law Finn, P.C. is a firm of Houston business lawyers who focus on Texas shareholder dispute resolution. They also handle mergers and acquisitions, non-compete agreements, intellectual property, employment contract law, and other matters pertaining to Texas business organizations and transactions. If you have a shareholder dispute or other business-related matter, contact one of Texas’ premier business law attorneys at the Vethan Law Finn, P.C., with offices in Houston and Sugar Land.

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