Protection of Close Corporation Minority Shareholders in the United States
27 Pages Posted: 19 Feb 2014 Last revised: 30 Aug 2018
Date Written: February 18, 2014
This paper discusses the problems and legal protections of minority shareholders in close corporations in the United States. Minority shareholders in their corporation may be concerned with having voice, access to information, some control, return and ability to exit. In addition, minority investors are often concerned that those in control will act opportunistically and take advantage of their control for personal benefit. It is important to understand how corporate law default rules deal with these issues and the extent to which the minority shareholders are protected while allowing those in control to exercise their power. While these issues can all be addressed by shareholders contracting for protection ex ante, those without contracts also have some legal protections ex post.
Keywords: Close corporations, Closely-held corporations, contracting, corporate law, private ordering, fiduciary duty, oppression, shareholder oppression, controlling shareholders, minority shareholders, minority shareholder protection, limited liability company
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