Unmatched Experience

Our team is comprised of three well-respected names from the Arkansas Attorney General’s Office.

Common elements in shareholder oppression claims

Perhaps you are a minority shareholder in an up-and-coming, closely held company. You had high hopes for your investment, but now you are having second thoughts.

You see signs of shareholder oppression and you believe the company is violating its fiduciary duty.

A variety of definitions

Different courts have developed different definitions of shareholder oppression. Some call it “burdensome, harsh and wrongful conduct.” Others see it as a violation of the fiduciary duties of “good faith and loyalty” that a company owes to its shareholders. While the action that causes distress to you as a minority shareholder may not be fraudulent or illegal, it is a clear example of improper conduct.

How courts view shareholder oppression

Many common elements are present in cases of shareholder oppression:

  • A company fails to pay dividends when it is financially able to do so.
  • Majority shareholders receive excessive compensation, which is unfair to minority shareholders.
  • A company seeks to implement a stock-redemption plan that favors majority shareholders.
  • Shareholders are not permitted to have a voice in management decisions.
  • The company does not provide shareholders with the financial statements they should receive.
  • The company fails to provide minority shareholders with the paperwork necessary to evaluate options when they are considering selling their shares.

Freezing minority shareholders out

One of the most egregious acts of oppression is freezing out minority shareholders by terminating their employment with the company. When shareholders do not receive dividends, they receive their return on investment through the salary they earn. Termination defeats the purpose of becoming a minority shareholder.

Seeking relief

As a minority shareholder, you have no control over the workings of the company and cannot prevent any actions that you see as unfair to those of you who do not have a majority stake in the venture. However, you do have the option of seeking judicial relief through a breach of fiduciary or shareholder oppression lawsuit, and you should not hesitate to pursue such relief.

No Comments

Leave a comment
Comment Information

When You Have Questions, Contact Us For Answers

Need legal assistance or guidance? Do you have questions about a legal matter? Unsure if you even need legal representation? Whatever the problem you're facing, put your trust in our team at McDaniel, Richardson & Calhoun. Contact us today to get started.

Call our Little Rock, Arkansas, law office at 501-313-0461 or reach us via email by completing our online contact form. We routinely work with individuals, families and businesses in Pulaski County and others throughout Central Arkansas.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Contact Us For A Consultation

1020 W. Fourth St., Suite 410 Little Rock, AR 72201 Fax: 501-588-2104 Little Rock Law Office Map