Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 43
DUTIES OF MAJORITY SHAREHOLDERS;
SHAREHOLDER RIGHTS
Section
§ 43.01 Introduction
§ 43.02 Closely Held Corporations
§ 43.03 Risk of Oppression of Minority Shareholders
§ 43.04 Obligations/Duties of Majority Shareholder/Partner and Majority
Shareholder/Director
§ 43.05 "Fundamental Corporate Actions" and Legal Proscriptions and
Prescriptions Regarding Same
§ 43.06 Mergers and Exchanges of Assets
§ 43.07 Rights of Creditors at Time of Fundamental Actions
§ 43.01 Introduction
The holders of the majority of the shares in a corporation owe to the
minority shareholders and the corporation the duty to exercise good faith,
care, and diligence, to conserve the property of the corporation, and to
protect the interests of minority shareholders.1 The majority shareholders
have no right to appropriate or divert to themselves assets of the
company to the detriment of other shareholders which would violate their
fiduciary duty.2
Minnesota courts have held that shareholders in a corporation owe
each other a duty of good faith, but generally do not owe each other
fiduciary duties.3 However, shareholders in a closely held corporation
have a fiduciary relationship with one another because of their
"partnerlike" relationship: "The law imposes on each the highest
standard of integrity in their dealings with each other."4 Shareholders "in
a closely held corporation have a fiduciary duty to deal openly, honestly,
and fairly with other shareholders."5
The Minnesota Legislature has extended the court’s available
remedies for shareholder dissension within the close corporation setting.
Minn. Stat. § 302A.751, subd. 1(2), authorizes the court to grant any just
and reasonable equitable relief when it is established that "the directors
or those in control of the corporation have acted fraudulently or illegally
toward one or more shareholders in their capacities as shareholders or
directors, or as officers or employees of a closely held corporation."6
Also, pursuant to Minn. Stat. § 302A.751, subd. 1(b)(3), a court may
intervene when it is determined that “the directors or those in control of
the corporation have acted in a manner unfairly prejudicial toward one or
more shareholders in their capacities as shareholders or directors of a
corporation that is not a publicly held corporation, or as officers or
employees of a closely held corporation.”7
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman