In our previous blog posts on Ritchie v. Rupe,[1] available here and here, we discussed the rights of minority shareholders in a closely held corporation under Texas law. We explained that, post-Rupe, in Texas, minority owners would have to show abuse of authority with the intent to harm the interests of one or more of the shareholders that creates a serious risk of harm to the corporation in order to show shareholder oppression.[2] Moreover, a Texas minority shareholder who successfully proves oppression would no longer be entitled to a court-ordered buyout; instead, the sole remedy for oppression would be the appointment of a receiver.[3]
Because small businesses are the foundation of our economy, it is important to understand cases involving minority shareholders’ rights and start planning ahead for the unforeseen. In this two-part blog series, we will look at Bontempo v. Lare,[4] a recent Maryland Court of Appeals case, which dealt with shareholder oppression and appropriate remedies under Maryland law. Stay tuned for our next post.
This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.
Steps have been taken to verify the contents of this article prior to publication. However, readers should not, and may not, rely on this article. Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.
About the Author
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 <a ” ” target=”_blank” href=”http://www.rshawnmcbridelaw.com”>www.mcbrideattorneys.com.
[1] See generally Ritchie v. Rupe (Tex. 2014).
[2] Id. at 20.
[3] Id. at 21.
[4] See generally Bontempo v. Lare, No. 13-C-10-081915 (Md. Ct. App., Aug. 6, 2015).