What Constitutes Shareholder Oppression?

office meeting

Corporations are usually controlled by majority shareholders. They influence and make important decisions for the company, sometimes leaving minority shareholders without fair input. For such reasons, minority shareholders are often vulnerable to oppression or abuse by controlling shareholders. Sometimes, majority shareholders make self-serving decisions that don’t reflect the best interests of the minority shareholders, and minority shareholders are left without recourse to oppose their decisions. Thankfully, there are state statutes that protect these shareholders.

If you believe that you are experiencing shareholder oppression, you have options. Contact our New Jersey shareholder oppression attorneys today at (201) 897-4942 for a case review!

Examples of Shareholder Oppression

Shareholder oppression can occur in a wide variety of ways. Although there isn’t a “one size fits all” definition, there are specific issues that commonly arise in the context of shareholder oppression. Common examples include:

  • When majority shareholders only make decisions that are in their own best interest while suppressing minority shareholder votes and interest.
  • When majority shareholders use their leverage to breach an existing shareholders agreement in violation of the minority shareholders’ rights
  • When a new business structure is established and marks a change in the initial relationship between shareholders, thus benefiting some shareholders over others.
  • When minority shareholders are being excluded from major company decisions regarding profit and other important company topics.
  • When majority shareholders are committing fraudulent activities and siphoning corporate monies for personal gain

Proving Shareholder Oppression

Proving shareholder oppression is not an easy task, especially if it occurs in a private, closely held company. Courts will first look to a valid and binding shareholders agreement to see how the parties’ initially intended to govern the corporation. To have a successful shareholder oppression case, you will need to prove that the majority of shareholders are acting against minority shareholders’ best interests, either by breaching a shareholders agreement or making decisions in a manner that adversely impacts and oppresses the minority shareholders.

It is important to know that shareholder oppression can still occur outside shareholder meetings or decision-making processes. For example, if you are a manager or director who holds shares and is experiencing discrimination or prejudicial treatment, it could be considered shareholder oppression. However, since each corporation’s establishments and operations are different, your case should be assessed by an attorney.

What Can I Do If I am Experiencing Shareholder Oppression?

If you believe you are experiencing shareholder oppression, you should contact an experienced business law attorney. An experienced business law attorney can help you determine if injunctive relief is necessary to stop a future action, such as a sale, stock split, or future payment. Another legal remedy is to file a suit for a breach of contract or a breach of fiduciary duty, particularly where an existing shareholders agreement is being breached.

New Jersey Shareholder Oppression Attorney

Shareholder oppression is a serious issue that many shareholders encounter. Whether you are a minority or a majority shareholder, you have rights that protect you against shareholder oppression. Our team at M. Ross & Associates, LLCis dedicated to helping professionals throughout New Jersey find favorable solutions to their business problems. We work with small to medium businesses, family-owned businesses, entrepreneurs, startup entities, and individuals who need transactional advice or courtroom representation.

Our New Jersey business attorneys are well versed in shareholder oppression lawsuits and can carefully analyze your case to determine whether oppression has occurred and what legal remedies can be pursued.

You don’t have to handle shareholder oppression on your own; let our team help you. Contact our New Jersey shareholder oppression lawyers today at (201) 897-4942 to schedule a consultation!