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Business Cases in the News: Shareholder Oppression

Business Cases in the News:


Shareholder Oppression  


     In the recent (unpublished) case of Berger v. Katz, Case No.: 293880 the Michigan Court of Appeals, the appellate court of Michigan, affirmed (agreed with) significant relief afforded to the minority shareholder. In doing so the Court of Appeals swept aside the argument of the Defendants that the minority shareholders were not entitled to relief under MCL 450.1489 because all of their decisions and conduct was authorized by the bylaws.  The Court of Appeals noted that even authorized and legal decisions could still be oppressive to the minority shareholders.


     In reaching their decision, the Court of Appeals looked at the statutory language:


MCL 450.1489 provides, in relevant part:


(1) A shareholder may bring an action in the circuit court of the county in which the principal place of business or registered office of the corporation is located to establish that the acts of the directors or those in control of the corporation are illegal, fraudulent, or willfully unfair and oppressive to the corporation or to the shareholder…


(3) As used in this section, “willfully unfair and oppressive conduct” means a continuing course of conduct or a significant action or series of actions that substantially interferes with the interest of the shareholder as a shareholder. Willfully unfair and oppressive conduct may include the termination of employment or limitation on employment benefits to the extent that the actions interfere with distributions or other shareholder interests disproportionately as to the affected shareholder. The term does not include conduct or actions that are permitted by an agreement, the articles of incorporation, the bylaws, or a consistently applied written corporate policy or procedure.


     If you or a loved one are a victim of oppressive conduct, call Guy Vining of the Vining Law Group, PLC, for a discrete and no charge consultation. Elements of oppressive conduct found by various courts include: being denied notices, changes in bylaws and articles of incorporation, insider contracts, salary elimination, termination of employment, issuing stock without need the corporation, significant pay and benefit increases to those in control of the corporation and denying the minority shareholders a voice in management.


Guy Vining has practiced law throughout the state of Michigan. His office is located in the downriver city of Taylor where he primarily serves the Metro-Detroit area. He has represented shareholders in stock court actions including the Court of Appeals. All initial consultations are confidential and without charge. Please feel free to call.