Minority Shareholder Rights

Closely held companies present unique issues with regard to minority shareholders and other minority interest holders.  Minority interest holders cannot control the course of the business and are subject to the majority stakeholder’s decisions.  There is often not a market to sell their shares or interests outside of the company.  This situation is ripe for litigation, whether warranted or not.

While minority interest holders cannot control the business the majority ownership still owes duties to these shareholders.  If the majority interests engage in conduct such as fraud, oppression, self-dealing, profit skimming, or any other act motivated by the desire to punish or coerce a minority shareholder it may result in a violation of those duties.

For minority shareholders, I can help ensure that your rights are respected and that you are not taken advantage of by the majority.  For the majority shareholders, I can counsel you to ensure that any decision you make respects the rights of the minority, satisfies your duties to them, and minimizes the risk of litigation arising out of any act.

Some common indications of a violation are listed below:

* Freeze outs
* Deliberate reduction in stock value
* Demands to sell stock at low value
* Failure to pay dividends and bonuses
* Denial of access to corporate records
* Termination of key business relationships
* Minority contracts are ignored or terminated
* Reduction in salary or salary discrepancies
* Threats if the minority shareholder does not comply
* Denial of voting rights
* Retaliation

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