Disputes can be common between owners of a closely held corporation, particularly when there is a minority shareholder. To this end, it is important that all minority shareholders be aware of Judicial Dissolution, a potential remedy against majority shareholder oppression.

If you own at least 20% of the company’s shares, you can seek an involuntary Judicial Dissolution if either:

  • Majority shareholders have engaged in illegal, fraudulent, or oppressive action toward you or other minority shareholders, or
  • The property or assets of the company are being looted, wasted, or diverted for non-company purposes by the majority shareholders.

The court, in determining whether dissolution is the best remedy, will also consider:

  • Whether the dissolution of the company is the only way you can reasonably expect to obtain a fair return on your investment; and,
  • Whether dissolution of the company is reasonably necessary to protect your rights.

As an alternative to dissolution, the court can order that you are compensated for the fair value of your shares. In doing so, courts will determine if the majority shareholder’s actions caused any devaluing of your shares. If this is the case, the court can adjust your compensation accordingly.

James G. Dibbini and Associates P.C can provide you with an in depth and comprehensive approach to your matter and help determine if dissolution is the right approach. To schedule an appointment with an attorney at our firm, please call (914) 965-1011 or email us at jdibbini@dibbinilaw.com to learn more.