Protecting the Rights of Minority Shareholders and Dissenting Shareholders in San Diego

By Watkins Firm, A Professional Corporation, California
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What should you know about protecting the rights of minority shareholders and dissenting shareholders in San Diego California? California has granted specific rights to minority shareholders of corporations who are based in California, even if the company was formed under the corporate laws of another state such as a “Delaware Corporation.”

These specific rights cannot be limited by corporate bylaws or other corporate documents such as a shareholder’s agreement or by the actions of majority shareholders, directors or officers of the corporation.

Minority Shareholder Rights in San Diego

San Diego minority shareholders have the specific right to examine the books or accounting records
of the corporation as well as the minutes of any corporate proceedings. Minority shareholders also have the right to inspect the “record of shareholders” for their corporation. There are specific requirements to exercise these rights based upon the percentage of an ownership interest one holds in the corporation. This is why it is important to speak with a minority shareholders rights attorney in San Diego. Your attorney should review your position in the company and provide sound advice and counsel on the steps required to gain access to the books and records of the corporation.

Shareholder Oppression

Shareholder oppression occurs when majority shareholders, directors or executives of a corporation take advantage of their power and position to take actions which are not in the interest of the corporation or the minority shareholders. Shareholder oppression usually occurs in closely-held corporation but can occur in any corporate setting. The tactics used by majority interests are designed to limit the influence of a minority shareholder, withhold or manipulate their rightful share of corporate profits or pressure the minority interest into selling their position in the corporation for less than the full value of that interest.

This can include, but is not limited to:
• Restricting or preventing access to corporate shareholder information and the company books
• Failure to declare a dividend or an unfair dividend
• Disproportionate compensation for majority shareholders
• Firing a minority shareholder or locking them out of the physical premises of the corporation

Dissenting Shareholders

What happens if the majority wishes to sell the corporation to another company, recapitalize or enter into a merger? The minority shareholders in a merger, acquisition or recapitalization have rights under California and federal law. A “dissenting shareholder” is usually a minority shareholder who does not consent to the proposed merger, acquisition or recapitalization.

Dissenting shareholders in San Diego may have the right to establish the “fair market value” of their shares and/or force the corporation to pay the fair market value of your shares in cash prior to the acquisition, merger or recapitalization. A minority shareholder may forfeit these rights under certain circumstances and there is only a few weeks of time for these crucial decisions to be made.

ABOUT THE AUTHOR: Daniel Watkins
Mr. Watkins is an experienced litigator and trial attorney with over 50 Jury and Bench trials to his credit in decades of practice. He has successfully represented both large companies and individuals, and achieved substantial victories in well-publicized trials throughout California and Wisconsin

Mr. Watkins has successfully tried cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practice, Fraud, Breach of Contract, Premises Liability, Product Defect, Discrimination, Sexual Harassment, Construction Defect, Unfair Competition, Defamation & Trade Secrets

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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