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Minority Shareholders Rights

On Behalf of | May 26, 2015 | Minority Shareholders, Multiple Owners, Texas Law Update, Uncategorized

Post 1

For nearly three decades, minority shareholders in a closely held corporation in Texas could obtain court-ordered buyouts of their shares as a remedy for oppression by the majority.[1]  To do so, minority shareholders were required to show that the majority’s conduct substantially defeated the reasonable expectations of minority shareholders and was burdensome, harsh, and wrongful conduct.[2]  This was, in part, based on the courts’ recognition of the fact that minority shareholders in close corporations lacked public market for their shares and that buyout was a less drastic measure than, say, receivership for the company’s business.

That is, until June 2014, when the Texas Supreme Court completely changed the lay of the land in Ritchie v. Rupe.[3]  So what are oppressed minority shareholders to expect now? Stay tuned for our next post.

About the Author


So-Eun Lee – So-Eun Lee is an associate attorney in the New York office of The R. Shawn McBride Law Office, P.L.L.C.  She concentrates her practice on business law.  So-Eun can be contacted at: (347) 921-0173 or [email protected].  Her profile is available on


R. Shawn McBride – R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Office, P.L.L.C. which helps clients in legal issues related to starting companies, joint ventures, raising capital from and negotiating with investors and outside General Counsel functions.  Shawn can be contacted at: 407-517-0064; [email protected], or

[1] See generally Davis v. Sheerin, 754 S.W.2d 375 (Tex. App.—Houston [1st Dist.] 1988, writ denied).

[2] Id. at 381—82.

[3] See generally Ritchie v. Rupe (Tex. 2014).