Minority Shareholder Oppression

Understanding Rights of Minority Shareholders in Texas

The Texas legal landscape surrounding minority shareholder oppression has evolved, especially following the 2014 landmark case of Ritchie v. Rupe, which significantly altered the remedies available to oppressed minority shareholders.

Common Forms of Oppressive Conduct

Have the majority shareholders refused to declare dividends or paid these dividends only to themselves, leaving you out?
Where you denied access to company information and record?
Was there a “dilution” of your minority ownership by issuing new shares solely to majority shareholder?
Have the company assets have been improperly used to enrich the majority shareholders?

While the legal avenues for minority shareholders have narrowed in Texas, legal remedies still exist to address oppressive conduct. They are, however, remedies provided by statute, such as appointment of a receiver under certain circumstances.

Legal Remedies for Minority Shareholder

Minority shareholders in Texas must rely on alternative legal strategies to address oppressive conduct, such as:

Breach of Fiduciary Duty: If majority shareholders act against the best interests of the company, minority shareholders may file a derivative lawsuit on behalf of the corporation.
Inspection Rights: Under Texas law, shareholders holding at least 5% of shares or having held shares for six months can request to inspect corporate books and records for a proper purpose.
Contractual Agreements: Implementing buy-sell agreements or other contractual provisions can provide predefined remedies in cases of disputes or oppressive behavior.

Seek Experienced Legal Counsel

Contact us today for a consultation and take the first step toward resolving shareholder disputes effectively.

DISCLAIMER

The information provided on this website is for general purposes only and cannot be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this website does not constitute, an attorney-client relationship. Each case is different. Call us to discuss the specific facts of your case.