Slinde Nelson
Email Our Firm

Shareholder Oppression: Squeeze-Outs

As we've written before, minority shareholder oppression can take a number of different forms and vary in its severity. Some forms of oppression simply deprive minority shareholders of certain rights they should be entitled to. More complete forms of oppression, however, may effectively remove the minority shareholder from the company altogether.

One such form of oppression is known as a "squeeze-out." With a squeeze-out, the majority shareholders essentially use their collective controlling interest to deprive a minority shareholder of any ability to control the company, or derive any economic return from the company.

For example, say four people started a corporation, as equal shareholders, to operate a pizza restaurant. Before the oppression each shareholder was paid equal amounts, and ran certain aspects of the pizza business. Now imagine three of the shareholders have a falling out with the fourth shareholder. If those shareholders vote to remove the fourth shareholder from the board, and remove his right to compensation, his investment in the pizza business will become practically worthless. Undeniably, this fourth shareholder will grow tired of the business relationship and be forced to sell its shares back to the majority at a reduced price. Thus this shareholder is squeezed out of the company.

Thankfully, the law protects against this kind of shareholder oppression. Majority shareholders who conduct a squeeze-out may be required to show there was a legitimate corporate purpose for their actions, and that there was no other practical way of achieving that purpose.

Understand, however, that fighting against a majority is always going to be an uphill battle. You should contact an attorney with shareholder oppression claims experience who can help make sure you receive the true value of your shares rather than that set by an oppressive majority.

No Comments

Leave a comment
Comment Information

111 Southwest 5th Avenue Suite 1940
Portland, OR 97204

Toll Free: 866-280-7562
Fax: 503-417-4250
Map & Directions

Contact Us to Discover What We Can Do for You

Contact us online using the form below or call us at 866-280-7562 to see how we can put our skills and experience to work for you.

Bold labels are required.

Contact Information

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.


Privacy Policy