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I Have Been Treated Unfairly as a Shareholder – Can I Force a Buy-Out?

Posted by Attorney Stephen Hance | Mar 29, 2013 | 0 Comments

The short answer is yes. When a shareholder has been “squeezed out” of a company or treated unfairly, Minnesota law allows the disgruntled shareholder (in Minnesota corporations) to sue for relief. One of the most common forms of relief for the disgruntled shareholder is a court-ordered buy-out of his or her shares by the company or other shareholders.

Courts have the power to order a buy-out most commonly where controlling shareholders have acted in an “unfairly prejudicial” manner. Conduct is unfairly prejudicial, according to Minnesota courts, where it frustrates the “reasonable expectations” of the shareholder. Courts have taken a fairly broad view of the term unfairly prejudicial, which has included the following:

1.  Where a controlling shareholder has breached his/her fiduciary duty toward the disgruntled shareholder;

2.  Where the disgruntled shareholder's voice in management has been silenced;  and

3.  Where the disgruntled shareholder has been terminated from employment where he or she reasonably expected continued employment in connection with the ownership stake.

There are many other factors that figure into determining whether it would be a good decision to pursue a court-ordered buy-out such as the cost of litigation, the potential risks and the potential benefits. These cases are often complex as they involve analysis of financial records and call for a range of evidence dealing with the parties' history of dealing and company financial history.

If you have a potential claim in this area of law, it is important that you get the advice of experienced counsel to weigh your options. At Hance Law Firm, we are always happy to meet with you to evaluate your case. Our initial meeting is always free of charge.

About the Author

Attorney Stephen Hance

Steve represents and advises clients that are dealing with business and real estate disputes. Steve is an investor and business owner, and his approach is unique from other attorneys.


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