Leading Michigan Shareholder Oppression Attorneys with Over $2 billion Recovered in Shareholder Rights Cases
Shareholder oppression occurs when a shareholder or a group of aligned shareholders who own a majority of a company’s shares, and therefore control a company, use their control to operate the company for their advantage at the expense of minority shareholders. Likewise, the same can be true for members of an LLC.
The typical closely held corporation is owned by only a small number of shareholders who are locked into their investment because there is no public securities market to trade shares of the corporation’s stock. Noncontrolling shares are unlikely to attract interest from private investors and corporate governance documents frequently preclude or restrict a transfer of shares. This leaves minority shareholders in a vulnerable position with no means of exit if they are treated unfairly.
Related: What Are the Rights of Minority Shareholders in Private Companies?
Squeeze Outs and Freeze Outs
A “squeeze out” or “freeze out” occurs when the majority shareholders use their strategic position and power within the company to force out minority shareholders. For instance, the majority shareholder may force them to sell their shares to the company at an unreasonably low price, or resort to remaining shareholders but not receiving any benefit of ownership.
“Squeeze outs” and “freeze outs” can also occur when a company is merged with another corporation controlled by the majority shareholder, and the terms of the merger force the minority shareholder to redeem their shares at an unreasonably low value. Unjustified termination of a minority shareholder’s employment or benefits is a common form of “squeeze out.”
Washouts
“Washouts” occur when the majority shareholders undergo a financial restructuring of the company that significantly dilutes a minority shareholders holdings to the point of being worthless.
Related: What Is Oppression of a Minority Shareholder or Minority Member?
- Actions that prevent a minority shareholder from exercising typical shareholder rights
- Diverting corporate funds to outside companies
- Misappropriating corporate opportunities and reducing value of minority shareholding interest
- Hiding corporate profits from minority shareholders
- Mismanagement of the corporation resulting in harm both to the corporation and the interests of shareholders
- Depriving minority shareholders from receiving benefits of ownership
- Refusing to pay dividends to a minority shareholder, despite the existence of cash reserves in the corporation
- Preventing shareholder from participating in corporate decisions
- Improper termination of minority shareholders employment
- Improperly withholding dividends
- Majority shareholders paying themselves excessive salaries, bonuses or benefits
- Withholding corporate records
- Denying minority shareholders access to company premises and restricting access to company employees
- Excluding minority shareholders from participation in management decisions
Related: Wrongful Discharge & Shareholder Oppression Case Settles For 2.7M
Shareholders of a corporation and members of an LLC have the right to access company financial information and records including:
- Documents relating to any proposed buy-out of shareholder’s interest
- Balance Sheets, statements of income, and application of funds
- Financial statements, whether audited or unaudited
- Tax returns
- Appraisals or valuations of the company or its assets
- Statements of any bank or brokerage account
- Statements of accounts receivable
With decades of experience, The Miller Law Firm, P.C. delivers hands-on litigation and dispute resolution services. Through our in-house e-Discovery and document management services, our Michigan shareholder oppression lawyers are able to reduce costs associated with litigation, increase productivity, and adapt to our client’s specific needs. When working on a case, we consider all the issues surrounding your business to maximize the odds of delivering the best possible results.
Contact our Michigan shareholder oppression attorneys now.
Our attorneys can also assist you with the following cases:
- Arbitration
- Automotive Litigation
- Class Action Litigation
- Commercial Litigation
- e-Discovery Services
- Employment Litigation
- Probate Litigation
- Securities Fraud
- Shareholder Disputes
If you are a minority shareholder and the majority is using its control to harm your interests by cutting off your income, excluding you from decisions, withholding records, or forcing you out at an unfair price, you likely have grounds for a claim. Contact Miller Law for a case evaluation.
Michigan courts can order a range of remedies, including a buyout of your shares at fair value, dissolution of the company, restoration of withheld compensation or dividends, and damages. Miller Law’s attorneys have recovered over $2 billion in shareholder rights cases and will pursue every available remedy on your behalf.
Yes. Majority shareholders who pay themselves unreasonable compensation while withholding dividends from minority shareholders may be committing shareholder oppression under Michigan law. Miller Law can analyze your company’s financials and take action to stop this conduct.
A freeze out occurs when majority shareholders use their control to force minority shareholders out of the company, often by terminating their employment, cutting off benefits, or forcing them to sell shares at an artificially low price. This is actionable under Michigan law, and Miller Law has extensive experience challenging these tactics.
Yes. Michigan law gives minority shareholders the right to access key financial records, including balance sheets, income statements, tax returns, appraisals, and bank account statements. If you are being denied access, Miller Law can compel the production of those records.
Yes. The same legal protections that apply to minority shareholders in corporations generally extend to minority members of Michigan LLCs. If your fellow members are using their control to harm your interests, Miller Law can help you explore your legal options.
Michigan’s statute of limitations for business-related claims varies depending on the specific cause of action. Waiting too long can forfeit your rights. Contact Miller Law as soon as you suspect oppression so we can evaluate the timing and protect your claim.
Yes. Using a merger to force minority shareholders to redeem their shares at below-market value is a recognized form of shareholder oppression in Michigan. Miller Law can challenge the fairness of the merger terms and seek proper valuation of your interest.
Document everything you can and contact a Miller Law shareholder oppression attorney immediately. Our team uses in-house eDiscovery services to uncover hidden financial records and prove misconduct. The sooner you act, the better your chances of preserving key evidence.
Call us or complete the contact form at millerlawpc.com to schedule a consultation. Our Michigan shareholder oppression attorneys will review your situation, explain your rights, and outline a strategy to protect your investment.