Shareholders of privately held corporations and limited liability companies have unique obligations to the company and to each other. Both the Business Corporations Act and the Limited Liability Company Act afford minority shareholders rights to challenge acts of the controlling shareholders by bringing claims of oppression and alleging corporate waste (among other things). Additionally, minority shareholders have certain rights to access the company’s books and records. The Acts however can be tempered by a companies operating agreement and corporate structure.
Often minority shareholders use theses statutory allowances improperly, and other times the majority shareholders improperly use their majority position to ‘freeze’ or ‘squeeze’ out the minority shareholders from the company. Whether the acts of the minority or majority shareholders are the problem often depends on the motives of the shareholder, application of the business judgment rule, and the duties owed as determined by the Acts or the operating agreements.
IND LAW litigates claims for both minority and majority shareholders of privately held companies. We have successfully taken these cases to trial and obtained favorable settlements for our clients.