What Rights do Minority Shareholders Have?

Minority shareholders have rights, but the majority doesn’t always respect those rights. If you are a minority shareholder, you should be aware of what the majority can and can’t do. When the corporation infringes on your rights, you can take legal action.

The Basic Rights of the Minority

If you are an employee as well as a minority owner, you can be fired. In fact, you receive no different treatment than a regular employee. You can be terminated whenever the company deems fit.

However, this can cause a problem. Terminating you could affect the personal value of your shares. According to corporate law, you have a right to sell your shares. But the corporation may not allow it.

If there is no previously existing agreement between shareholders, the dispute could go to the court. In some cases, there are laws that protect minority shareholders. The court will rely on those laws to help them settle the issue.

Furthermore, the court will look at the circumstances. The majority of shareholders have the power to manage the business, but they also have a duty to the minority shareholder. If a majority owner breaches that duty, the court could find in favor of the minority.

Other Rights

Minority shareholders don’t only face problems when they are terminated. Regardless of your status, the majority has a fiduciary duty to you. They cannot try to oppress the minority owners. Any actions that are prejudiced against you or other minority shareholders could result in a lawsuit. If you work with an attorney, you can hold the majority responsible for their actions.

An act that oppresses the minority is known as minority shareholder oppression. This type of act can occur in many different ways. For instance, the majority could misuse corporate funds. They might use the money to pay for the majority’s personal expenses. However, this action is unfair to minority shareholders.

Although the minority does not have control in the business, they do have a right to fair treatment. The majority should act in a way that is beneficial for the business and all of the shareholders.

Getting a Shareholder Agreement

If you have a shareholder agreement, you may have more rights. Before buying your shares, you can insist on having a written agreement. In this document, you can detail your rights. You can have a provision for the termination of employment and many other circumstances.

Having a shareholder agreement makes it easier to protect your rights. Without one, you need to rely on the courts. For the best results, you should seek legal representation. They can examine your situation and determine whether or not you have a strong case.

Working with an Attorney to Understand Your Rights

There are over 70,000 firms in the Dallas-Fort Worth area. Throughout the city, there are many minority shareholders. But many of those individuals are not aware of their rights.

Even individuals who have some knowledge of corporate law can be confused by the issue of minority rights. By working with a shareholder oppression lawyer in Dallas, you can learn more. If you are a victim of shareholder oppression, you can take legal action against the corporation.

In some cases, this could result in the court ordering the majority to buy back your stocks. When there is extreme mismanagement, the court could decide to dissolve the corporation.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.