What is an Oppressed Shareholder?

An oppressed shareholder is someone who owns stock in a closely held company, but is not treated properly by the majority or controlling shareholders.  Both New Jersey and New York law protect minority shareholders from the controlling shareholders taking advantage of them.  If you own stock in a closely held corporation, and have been abused, treated unfairly, or “frozen out” by the majority shareholders, then you might be an oppressed shareholder.

What Type of Treatment is Considered Oppressive?

In both New Jersey and New York, oppression means the controlling shareholders are not treating you the way someone would reasonably expect to be treated as a minority stock owner.  For example, it can include not getting your fair share of the profits or dividends, being excluded from shareholder meetings or business decisions, or being fired or removed from your position as an employee, officer, or director of the corporation.

Legal Remedies For Oppressed Shareholders

Depending on the circumstances, if you have been oppressed as a shareholder of a privately owned company, a court could force the majority shareholder to buy your stock from you at the fair value of the stock.  This is intended to allow you to recover the value of your investment, while allowing the controlling shareholders to continue running the business.  In rare circumstances, a court could instead order the dissolution of a company as the remedy for an oppressed shareholder.

Shareholder’s Expectation of Continued Employment

In many instances, some of the owners of a closely held corporation are also employees of the company, and make their livings from that job.  Under the New Jersey Oppressed Shareholder Statute, shareholders of closely held corporations can have a reasonable expectation of continued employment from the company in which they own stock.  When that is the case, if the minority shareholder has been fired, demoted, or forced to quit by the majority shareholders, he might be entitled to damages for his lost salary, bonuses, health insurance, and other employment benefits.

The Nirenberg Law Firm Can Help

The employment law attorneys at The Nirenberg Law Firm are experienced at helping minority shareholders who have been oppressed by unreasonable behavior by the controlling shareholders.  Contact us online, or call us in New Jersey at 201 487-2700 or in NYC at  or 212 398-7100 to schedule an appointment.