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A Panoramic Discussion of the Squeeze-Out Techniques Often Used By Majority Shareholders

The purpose of this blog entry is to provide a brief list of the squeeze-out techniques often used by majority shareholders in their effort to oppress minority shareholders. The list which follows is merely illustrates of some of the techniques I often encounter with regard to my representation of oppressed minority shareholders. Of course, this list is not exclusive. 
 

Generally, 'oppression has been defined as frustrating a shareholder's reasonable expectations.'  Brenner v. Berkowitz, 134 N.J. 488, 506 (1993) (citing, 2 O'Neil's Close Corporations § 9.29 at 132 (Callaghan & Co., 3rd ed. 1988)).  The following situations could constitute actionable unlawful 'oppression' where the majority:

has cut off the flow of income to the minority owner by refusing to declare dividends; terminated the employment of the minority or their family members; removed the minority from the board of directors; decided to award themselves (or their family members) exorbitant salaries and/or bonuses; diverted corporate assets to other corporations which are owned by the majority and not the minority; siphoned off corporate assets by entering into leases or loans with terms favorable to the majority while at the same time detrimental to the minority; refused to enforce contracts that are beneficial to the corporation because the enforcement of those contracts would be personally detrimental to the majority; withheld company information; embezzled company assets; and/or acted fraudulently towards the corporation, which, in turn affects the minority shareholder.

   
In blog articles to follow, I will go into greater detail as to the majority's use of the afore-described squeeze-out techniques along with how a minority shareholder may employ the law to fight back.

Full post as published by New Jersey Law Blog on February 27, 2009 (boomark / email).