Oppression of Minority Shareholders: Protecting Minority Rights

Unfair treatment of holders of minority interests in family companies and other closely held corporations by persons in control of those corporations is so widespread that it is a national business scandal. The amount of litigation growing out of minority shareholder oppression –actual, fancied or fabricated– has grown tremendously in recent years, and the flood of litigation shows no sign of abating. This paper outlines and discusses briefly: (1) the most frequent causes of dissension among shareholders in a close corporation; (2) the techniques used by controlling shareholders to eliminate minority shareholders from an enterprise or otherwise oppress them; (3) rights and tactics minority shareholders can use to protect their interests; and (4) advance planning and contractual arrangements that protect minority shareholders