Shareholder Oppression in Texas Close Corporations: Majority Rule Isn't What it Used to Be

Abstract

The doctrine of shareholder oppression protects the close corporation minority stockholder from the improper exercise of majority control. Although the Texas Supreme Court has not explicitly adopted the doctrine, appellate courts in Texas and in other jurisdictions have recognized and applied it in numerous decisions. Because the shareholder oppression doctrine potentially alters a number of fundamental legal principles, including the employment at will doctrine, the business judgment rule, and derivative lawsuit requirements, it is critically important to be familiar with the doctrine's operation in close corporation disputes.

Keywords: corporation, oppression, close corporation, closely held, shareholder oppression, fiduciary duty, Texas