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Business Litigation: Oppression of Minority Shareholders



Minority Shareholder Oppression


Business Litigation: Oppression of Minority Shareholders

In years past, minority shareholders were frequently abused by majority shareholders with impunity. That is to say that the rights of minority shareholders were greatly constrained and limited. As a consequence their shareholder equity could be held up and used to benefit the majority shareholders who would take excessive salaries and benefits and other privileges not enjoyed by the minority shareholders. There were a few cases, which were the exception for instances forcing a corporation to pay a shareholder dividend.

In 1989 the legislature, however, enacted MCL 450.1489 with the purpose of providing minority shareholders a cause of action to complain in court against directors or those in control of the corporation. The statute provides a variety of relief which may be awarded to an aggrieved minority shareholder who is able to prove that the acts against him are: illegal, fraudulent or willfully unfair and oppressive. Oppression has been defined elsewhere to mean acts which are done under the color of authority which can be unnecessarily burdensome or severe or which weighs heavily.

This redress for wrongs against a minority shareholder gives such a minority shareholder, meaningful tools to level the playing filed. Among the remedies available the judge, upon a proper case, can even order a buy-out at a fair value so that the minority shareholders can get out and not be constantly victimized.


[Guy Vining, an attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the local communities and the tri-county area. If you or a family member of friend would like a no-obligation no cost consultation, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]


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