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Minority Shareholder Oppression

Experienced Dallas Attorney Litigates Minority Shareholder Oppression

Trusted Texas firm seeks to settle conflicts over alleged abuse of power

A Texas company that sells shares to investors often benefits substantially from the additional cash flow. When all goes well, shareholders with controlling interest and minority shareholders respect each other’s rights and investments in the company, but that is not always the case. At the Law Office of Paul R. Clevenger in Dallas, my office provides strategic legal advice and representation in corporate conflicts involving allegations of minority shareholder oppression. Clients throughout the Dallas area have relied on me for knowledgeable legal guidance since 1989.

Dedicated counselor helps clients understand and respect minority rights

A minority shareholder is any person who invests or buys stock in a company but owns less than half of the company’s total shares. Minority stockholders have certain rights under Texas law, including the right to:

  • Receive apportioned dividends — Each stockholder must be paid their fair share of dividends when the corporation’s profits are distributed.
  • Receive a certificate of ownership — Each shareholder must be issued a certificate of ownership for the stock they hold, and each share purchase must be formally registered by the corporation. If a shareholder wants to assert his or her rights in court, producing the stock certificate may be imperative.
  • Review records and books — A shareholder who has owned stock in a company for at least six months can request to examine the company’s accounting records and financial statements, shareholder meeting minutes, and certain other documents that the company is legally required to maintain.
  • Attend an annual meeting of stockholders — The law requires corporations to hold a stockholder meeting at least once a year. These meetings can give minority stockholders the opportunity to hear from majority stockholders or corporate executives about the company’s performance and direction.
  • Sue corporate directors — A minority shareholder who believes that corporate directors have breached their fiduciary duty can file a lawsuit on behalf of the corporation against the directors. A shareholder can also sue if majority shareholders attempt to keep the corporation’s success to themselves by creating a second, separate corporation to capitalize on the first corporation’s success.

Some close corporations with few shareholders accidentally suppress minority shareholder rights by thinking it is not essential to issue stock certificates, conduct corporate meetings or allow transparency of financial records. Other times, minority shareholder rights are suppressed intentionally.

Determined lawyer negotiates solutions to shareholder-director disputes

A minority shareholder may choose to pursue legal action against a corporation if its directors or controlling shareholders:

  • Withhold corporate records
  • Fail to issue stock certificates
  • Refuse to declare dividends
  • Misappropriate corporate profits
  • Usurp corporate opportunity

When a minority shareholder turns to the court to prevent a corporation from blocking his or her legal rights, the corporation may be ordered to pay the shareholder’s attorney fees.

With decades of experience handling business formation and business litigation, I understand the ins and outs of Texas laws pertaining to shareholder rights. I advise and represent corporate directors, small business owners and shareholders.

Contact a seasoned Dallas shareholder dispute litigator to schedule a legal consultation

Since 1989, the Law Office of Paul R. Clevenger in Dallas, Texas has represented clients in business disputes, including those pertaining to minority shareholder rights. To schedule a consultation with my office, call 469-212-9764 or contact me online.

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