Everyday companies form and business partners come together with the best of intentions and hopes. Often things begin smoothly but trouble rears its ugly head down the road. If you have formed a company and have a business partner, it’s devastating to find your trusted partner stealing from you. If you find yourself in this position, it’s crucial to consult an experienced and reputable business attorney before making accusations. It’s also essential to gather evidence.
Once you have these in place, there are some facts you must know. In many states, including Illinois and Wisconsin, if you formed an LLC or corporation, the law says the company, not an individual, has the legal claim against the stealing partner, shareholder or member. This is called a derivative action. A derivation action claim can only occur after a written account of the wrong and demand for action is made to the shareholder or member in question.
You may file a derivative action claim against another shareholder who stole from the company. However, you will need to file a lawsuit on behalf of the corporation or LLC. For instance, let’s say you and your business partner were both entitled to $50K in a bonus, but, unbeknownst to you, your partner took $75k instead. Despite it feeling very personal, you do not have the claim to that $25K — your company does.
In September 2014, the Wisconsin Court of Appeals addressed a derivative action. In the case Homecare Essentials, Inc et al v Mai See Vang Yang et al, it was determined that a derivative action claim may be filed by a shareholder to protect the company from injustices:
Derivative claims “belong to the corporation, not to the complaining