Minority Shareholders and Oppression in Close Corporations: Contracting as an Effective Protection Device

Minority shareholders have been facing problems generated by oppressive behavior of majority shareholders since people started to incorporate. Due to unique characteristics of close corporations, those problems acquire a different dimension when this kind of enterprise is involved. The absence of market for its shares, the nature of the relationship among its partners, and the expectations of the participants on the business create an environment in which oppression develops extremely easily. Along with the help courts and legislators have been providing through increasingly flexible decisions and statutes, practice has shown that there is much to be done by the minority shareholders themselves. Indeed, by making use of proper contractual devices (what may be easily achieved with the help of impartial and diligent lawyers), shareholders can reach rather satisfactory levels of protection against oppression