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Let's talk about minority shareholders in closely held companies
Posted on 6/29/13 at 2:05 pm
Posted on 6/29/13 at 2:05 pm
Hypothetical: One family controls well over half the stock in a small public corporation (stock is not listed on any exchange.) All board members are family members, or company officers or retired company officers. Outsider acquires 10-20% of the stock through private purchases from other shareholders not in the majority group. He starts agitating for a seat on the board and/or taking the company in a direction the majority does not agree with.
What leverage does he have (including legal remedies), what are his chances of success, and what can the majority do about it?
What leverage does he have (including legal remedies), what are his chances of success, and what can the majority do about it?
3
Posted on 6/29/13 at 3:44 pm to Jim Rockford
You'd need to refer to the articles of incorporation to get the right answer, but for most companies the minority shareholder can't just force his way in.
Posted on 6/29/13 at 3:46 pm to foshizzle
quote:
You'd need to refer to the articles of incorporation to get the right answer, but for most companies the minority shareholder can't just force his way in.
+1. Absent something in the articles, <50% w/ no allies in a closely held co. is not a good place place to be in to stir the pot.
Posted on 6/29/13 at 4:15 pm to rmc
That was my conclusion as well, although it seems possible they could stir up trouble with a shareholder lawsuit of some kind.
Posted on 6/29/13 at 6:30 pm to Jim Rockford
I remember very little from my Business Entities course in law school, but I do remember this: never take a minority position in a closely held corporation 
Posted on 6/30/13 at 9:32 am to Joshjrn
Definitely barking up the wrong tree. UNLESS, he has some under the table deal going with other family members that own enough stock to get him enough votes to get to the 51% if a vote comes.
A lot if times fam members are displeased but don't want to stir the pot. So the ride the coat tails of someone that will ruffle feathers and remain quiet about it until a vote comes to change and then they'll lower the boom with their vote.
A lot if times fam members are displeased but don't want to stir the pot. So the ride the coat tails of someone that will ruffle feathers and remain quiet about it until a vote comes to change and then they'll lower the boom with their vote.
Posted on 6/30/13 at 9:17 pm to Jim Rockford
Any chance this hypothetical company is located off highway 90?
Posted on 6/30/13 at 9:23 pm to TheSurge
And 308?
Posted on 6/30/13 at 9:35 pm to SLafourche07
No, a little bit West of Raceland.
Posted on 7/1/13 at 9:56 am to TheSurge
Sounds like a bank to me
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