Protecting Your Rights In Shareholder Disputes

Shareholders can play an important role in management decisions and future operations of a business. Particularly in small businesses, these decision-making powers can have a significant effect on the success or failure of a company.

But not all shareholders retain the same level of authority. Often, the control is designated to only a few shareholders who own a majority interest. This leaves shareholders with a smaller ownership stake, called minority shareholders, with little to no authority regarding business operations.

While this imbalance is fairly typical and usually functions without issues, some majority shareholders use their power to take advantage of or oppress minority shareholders.

Are Minority Shareholders Being Treated Fairly?

Oppressive actions against shareholders can include:

  • Freeze-outs
  • Squeeze-outs
  • Failing to distribute dividends
  • Denying rights to inspect corporate records
  • Selling off company assets
  • Diluting the value of shares
  • Reducing profits

These actions leave minority shareholders with few options and often result in a forced sale of their ownership stock at a significantly reduced price.

What Does The Law Say About Dissenters' Rights?

Even if minority shareholders are not considered "oppressed" under Oregon case law, a shareholder still maintains a right to object to certain decisions made by the majority. For example, under the Oregon corporate statute, a shareholder may object to a merger, plan of exchange, sale, amendment to the formation articles or any other action requiring shareholder approval.

Once a shareholder objects, that objecting shareholder has a right to a "fair value" buyout of his or her shares should the action proceed despite the objection. While it seems straightforward, the case law defining "fair value" is complex and evolving. In certain cases, the battle over what exactly is "fair value" can lead to a lengthy and drawn-out debate that centers on the applicability of minority and marketability discounts.

Remedies And Derivative Lawsuits Under Oregon Corporate Law

Minority shareholders can take a stand against oppressive actions. If you are facing oppression by majority shareholders or simply wish to sell your minority shares, speak with a Slinde Nelson business attorney to discuss your case.

During your free consultation with one of our business lawyers, we can help you determine the best options for your unique situation. Give us a call at 866-280-7562 or complete the brief online form. From offices in Portland and Seattle, we represent clients in both Oregon and Washington.