Disputes among shareholders in a corporation can be very problematic, costing a lot of money and disrupting operations. When shareholder disputes are among majority and minority shareholders, they can be especially difficult, due to an imbalance of power and decision making capabilities.
What Is Minority Shareholder Oppression?
Minority shareholder oppression in a corporation occurs when majority shareholders act unfairly or oppressively toward minority shareholders.
Why do majority shareholders make decisions to the detriment of minority shareholders? This may be done in an attempt to diminish the value of the minority shareholders’ interests in the business. However, there may be other reasons why this happens – intentional or unintentional.
It is important for minority shareholders to be aware of their legal rights. It is advisable to work with an attorney who has experience negotiating solutions to shareholder disputes – but who also has experience representing the interests of minority shareholders in court.
Examples of Minority Shareholder Oppression or Abuse
Minority shareholder oppression can take many forms, but some common examples of conduct that may occur include:
- Failure to pay dividends
- Forcing sales of stock
- Unfairly increasing compensation to majority shareholders who are officers
- Terminating employment
- Withholding information
- Blocking minority shareholders out of discussions
- Blocking minority shareholders from the premises
- Failure to provide adequate corporate reports and records
When working to resolve these disputes, it is important to understand what is at stake for minority shareholders. It is also important for these issues to be addressed promptly to minimize impact to the company and business operations.
Chenoweth Law Group, P.C., represents both minority and majority shareholders. If you wish to schedule a time to meet with an attorney to discuss your options going forward, please call 503.446.6261.