Dinn, Hochman & Potter, LLC

Minority shareholder disputes in closely held businesses

A closely held corporation is a good model for small business owners who want to retain control of their company, usually among family members or a small group of shareholders. It is not unusual for a closely held business to have different levels of shareholders, including those who hold only a minority interest. Even when an Ohio company has a small number of people with ownership rights, it may not be immune to shareholder disputes, especially if the minority shareholders feel their rights are not respected.

Minority shareholders still have a stake in the company and receive profits from its success. However, they do not have decision-making authority, so they may not be included in moves that seriously affect the future of the company. Nevertheless, minority shareholders do have rights if they disagree with decisions the controlling members make. For example, a minority shareholder may opt to sell his or her shares to other members.

Majority stakeholders have a duty to keep minority partners informed of the actions they take, typically by providing financial statements and valuation of company shares. If shareholders neglect their fiduciary duties toward minority partners, the minority shareholders may claim unfair behavior under oppression statutes. These statutes can compel the corporation to disband if the courts agree that the minority shareholders were treated unfairly and suffered financially as a result.

Although minority shareholders may not hold the same power to run the company as majority members do, they do have the right to protect their interest and investment in the closely held corporation. Since closely held companies are often comprised of family members, it may be difficult to imagine taking shareholder disputes to court. However, the advice of an Ohio attorney may offer options for a satisfactory resolution.

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