The business judgment rule insulates decisions made in good faith and in the best interests of the enterprise from being subject to judicial second guessing ordinary business decisions Majority shareholders that failed to pay dividends to a non-employee minority shareholders in valid exercise of business judgment rule did not…
Any action that the managers of a Limited Liability Company might take at a meeting can also be taken by executing a written consent. An action by written consent may, in some circumstances, avoid the need to assemble a quorum of the managers. The managers of an LLC many be…
‘Business Divorce’ refers to disputes in which the owners of a closely held business, whether a corporation, limited liability company, partnership or limited partnership, must separate their business interests. In many cases, such as oppressed minority shareholder cases or oppressed LLC member cases, there are allegations that those in control…
New York does not recognize a cause of action for minority oppression of a member of a limited liability company. Judicial dissolution is a remedy available to the minority LLC member when the majority is unwilling or unable to promote the purpose of the company or continuing the business has…
A trial court reasons that because a member-managed limited liability company is similar in management to a partnership, the court may reason from partnership law in fashioning a remedy for an expelled member. The majority members of the LLC, who voted under the Operating Agreement, to compel the withdrawal of…
In valuing the shares of a minority shareholder, a trial court must consider any valuation technique that is generally acceptable in the financial communities. Determining fair value is an art, not a science. Directors that hold a majority interest in a closely held business have a duty to deal fairly…
The Single Business Theory permits a court to treat related businesses as though they were one enterprise. Courts apply the single business theory in rare cases to prevent injustice. Pertuis v. Front Roe Rests., Inc., 2018 S.C. LEXIS 85 (2018) Statutes: S.C. Code Ann. § 33-18-420; S.C. Code Ann. §…
New York’s BCL requires at least 50 percent of shares to petition for dissolution based on deadlock, unless there has been a failure to elect directors. The fact that a shareholders agreement required the election of two deadlocked directors was not a basis to waive the statutory requirement. Parties avoid…
Courts use their authority to appoint a custodian to take control of a closely held corporation as a remedy to deadlocked directors or shareholders. A showing of serious or irreparable harm is required before a court will intervene in a deadlock among shareholders or directors; more than dissension is required.…
This seminal case by the New Jersey Supreme Court identifies minority oppression as the frustration of a shareholder’s reasonable expectations. A court may order the compelled purchase of a shareholder’s interest as a remedy for shareholder oppression when it is the only practical alternative to judicial dissolution. The minority shareholder…