McBride Law Blog

New York Law Update: Shareholder Oppression and Forced Buyout (Post I)

McBride Law Blog

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We write frequently about minority shareholder rights.  Really frequently.  We previously talked about Ritchie v. Rupe, a Texas Supreme Court case that made it harder for minority shareholders to bring lawsuits based on oppressive conduct by majority shareholders (see here).  We also discussed Bontempo v. Lare (available here), a Maryland case on remedies for shareholder oppression, which, in addition to dissolution, recognized equitable remedies, and Sneed v. Webre (available here), another Texas case, which held that the business judgment rule does not prevent minority shareholders of a closely held corporation from bringing a lawsuit on behalf of the corporation over the board’s objection.  Most recently, we wrote about Calesa Associates, L.P. v. American Capital, Ltd. (available here), a Delaware case that defined shareholder “control” in the context of a business transaction that was allegedly designed to squeeze out minority stockholders.

Piazza v. Gioia, a New York case, involved a dispute between a majority shareholder and a minority shareholder in the context of a closely held corporation.[1]  In Piazza, the minority shareholder filed a lawsuit seeking judicial dissolution of the company based on oppression.  In response, the majority shareholder argued that the lawsuit triggered the minority owner’s obligation to sell his shares under the shareholders’ agreement, which provided that a judicial dissolution proceeding would be deemed a voluntary offer to sell.

This post was part of multi-part series on shareholder oppression and forced buyout under New York law.  You can find the other posts by searching our blogs at www.mcbrideattorneys.com.  In our next post, we will discuss the details of Piazza v. Gioia.

This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity.

Steps have been taken to verify the contents of this article prior to publication.  However, readers should not, and may not, rely on this article.  Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.

[1] See generally Matter of Piazza v. Gioia, 2016 NY Slip. Op. 31430(U) (Sup. Ct. Kings Cty. July 21, 2016).  Unless otherwise specified, all references to the case are to this citation.

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