Situations involving allegations of unfair distribution between business partners, so-called “shareholder disputes”, generally do not have an easy and clear path to resolution. There are many ways a fellow shareholder can harm your company, whether it's getting more than their due, or diverting money from the company for their own benefit. For this, he can make a transfer to a bank account in his name, pay a salary to family members who are not employees of the company, or even pay personal expenses with the company's cash.


the shareholders generally allocate a certain amount of compensation or personal expenses in the form of a lottery of business owners, in accordance with the terms of a shareholders' agreement. However, problems arise when: a shareholder receives withdrawals from the company in excess of his fair share based on percentage ownership; and when a shareholder does not accept these withdrawals in the form of a tie, but spends them on the company's profit and loss statements. This reduces net income, which consequently reduces the profit to be shared based on percentages of ownership, with the fraudster still receiving 100% of the benefit of the diverted funds. This will not only affect the cash flow available to each shareholder, it will also unbalance the capital accounts and equity of the owners.


Based on the shareholders' relationship, one of them may suspect that something is wrong. Even if that doesn't happen, there are warning signs that can lead to mistrust: based on past performance, profits and cash decrease suddenly and unexpectedly; a sudden change in a partner's behavior and general attitude; the partner becomes defensive when asked about the company's financial status; the shareholder makes large personal purchases.


This understanding is essential for the problem to be solved at the beginning, starting with gathering documents and evidence, such as: partnership agreements, including amendments; financial statements and accounting; tax returns and bank statement with copies of canceled checks and credit card statements. Before collecting this evidence, it is essential not to raise suspicions with the investigated partner. Timely collection of documentation is important, so as not to give the other shareholder time to destroy or alter these documents.


Finally, it is also important that partners know how to deal with emotions. A shareholder dispute ranges from denial to sadness to anger. Keeping emotions in check during this difficult process certainly makes a difference. 


Get in touch with TATICCA – ALLINIAL GLOBAL, which provides integrated auditing, accounting, tax, corporate financefinancial advisorrisk advisory, technology, business consulting and training. For more information, access www.taticca.com.br or e-mail taticca@taticca.com.br. Our company has professionals with extensive experience in the market and has certified methodologies for carrying out activities.