Shareholder Oppression Actions

Shareholder Oppression Actions

 
The recent problems in the economy create significant pressures on companies -- pressures that may cause owners to attack each other. When owners of private companies feel they are being mistreated, they often turn to shareholder oppression lawsuits. By understanding a few basic approaches to shareholder oppression lawsuits, you can better defend against or prosecute these types of cases.
 
Professor Carey writes: During the last year, we have seen unprecedented volatility in the marketplace plummeting values for property, decreases in business activity, chaos in the financial markets, and other originators of financial stress. In the economic downturn that we are still experiencing, owners of companies are feeling a great deal of pressure, to say the least.

When public company shareholders are distressed about the actions of their company, they often file lawsuits that make it into the news. Recent shareholder lawsuits against Bank of America, Black & Decker and 3Com have all made headlines. But what about shareholders in non-public companies or members of limited liability companies? When owners of private companies feel they are being mistreated, they often turn to shareholder oppression lawsuits. Wallace Hilke, an attorney at Lindquist & Vennum PLLP and chair of the firm's shareholder disputes group, was recently quoted as saying: "In terms of creating the conditions for oppression, there's no doubt that the downturn contributes to that. A lot of seeds are [being] sown for later litigation" (Law360 "Rough Times May Breed Shareholder Oppression," April 1, 2009).

Holders of a minority position in a private company may feel that the majority owners are taking advantage of them especially during economic downturns. Likewise, owners of a majority position in a private company will sometimes use bad times as a cover to consolidate their ownership. The recent problems in the economy create significant pressures on companies pressures that may cause owners to attack each other. Shareholder oppression laws become a weapon of choice when minority owners want to express their displeasure with how they, as minority shareholders, are being treated.
 
  
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