Articles Posted in Section 12.56

Controlling Shareholders Distribute Profits to Themselves While Refusing To Declare Dividends
Litico Law Group

“Because Wallace and Joan have not authorized dividend distributions, Martin has received no financial benefit from his minority interest in E&E. Meanwhile, Wallace has approved his own annual compensation in the millions of dollars.” Smith v. Smith, 2020 U.S. Dist. LEXIS 81240, *3 (E.D. Mich. May 8, 2020). The Smith case, pending in the U.S.…

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Corporation, Not 50/50 Shareholders, Responsible for Provisional Director Fees in Shareholder Dispute
Litico Law Group

In a recent order, the Illinois Appellate Court held that Section 12.56(g) of the Business Corporation Act of 1983 (the “Act”) must be read to provide compensation for provisional directors by the corporation as opposed to it shareholders. Sinkus v. BTE, 2016 IL App (1st) 152135-U. In Sinkus, the plaintiff, Sinkus, and one of the…

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Illinois Court Orders 51% Shareholder to Pay 49% Shareholder’s Attorneys’ Fees in Case Involving Misuse of Corporate Funds and Bad Faith Counterclaim
Litico Law Group

The Appellate Court of Illinois recently affirmed an award of attorney fees in a Section 12.56 proceedings. In Thazhathuputhenpurac v. JT Enterprises of Chicago, the Court held that minority shareholder was entitled to reasonable attorney fees due to the 51% shareholder’s failure to act in good faith in “filing a frivolous counterclaim and forcing [the…

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Buyouts for Shareholders of Closely Held, Non-Public Corporations
Litico Law Group

A non-public corporation is a corporation that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or members of a national or affiliated securities association. In a shareholder action in a non-public corporation, circuit courts may order one of several remedies listed in Section 12.56 of…

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Business Corporation Act Section 12.56 Remedies for Oppressed Shareholders
Litico Law Group

Illinois law offers a number of remedies for closely held or private corporation shareholders trapped in toxic or dysfunctional relationships with their corporations or fellow shareholders (co-owners). Given the structure of most corporations, 50/50 shareholders and minority shareholders are the most apt to find themselves in these situations. Section 12.56 of the Illinois Business Corporations…

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