Disputes over closely held family corporations frequently arise when ownership of corporate stock is transferred informally within a family. While a parent may intend to make a lifetime, or inter vivos, gift of corporate shares to a child, courts generally require more than evidence of donative intent alone. The transfer must also be accompanied by proof that the gift was completed in accordance with governing corporate law and the corporation’s own stock-transfer requirement

On April 14, 2026, the Appellate Division, First Department issued a decision in which it reiterated the limits of fraud claims in the corporate governance context. In Massoumi v. Ganju, 2026 N.Y. Slip Op. 02208 (1st Dept. Apr. 14, 2026), the Court unanimously affirmed summary judgment dismissing fraud claims brought by a former chief executive officer who alleged that his fellow executives and directors misled him in advance of a board meeting that resulted in his removal.

In Celauro v. Celauro, 2025 N.Y. Slip Op. 04870 (Sept. 10, 2025), a minority shareholder of a family-owned business alleged that company executives operated an illicit cash business, diverted profits and deprived shareholders of distributions/dividends. The motion court dismissed most of the breach of fiduciary duty claim, finding many of the allegations to be time-barred under the six-year statute of limitations and the surviving claims too speculative.

The internal affairs doctrine is a “conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation’s internal affairs—matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders—because otherwise a corporation could be faced with conflicting demands.”

How can I protect my business from conduct risk? The U.S. Attorney in Manhattan recently announced a number of charges against two former executives of American Realty Capital Properties, Inc. ("American Realty"), a real estate investment trust ("REIT"), for their role in a 2014 accounting scandal. Brian Block, the former chief financial officer ("CFO"), is facing six criminal counts for securities fraud, conspiracy and the making of false statements. Lisa McAlister, the REIT