New Jersey\u2019s General Corporations law provides a statutory remedy for oppressed shareholders in a closely held corporation.\u00a0 N.J.S.A.\u00a0 14A:12-7 that so long as a corporation has 25 or fewer shareholders, then any shareholder can bring an action in New Jersey Superior Court seeking dissolution of the corporation when \u201cthe directors or those in control have acted fraudulently or illegally, mismanaged the corporation or abused their authority as officers or directors or have acted oppressively or unfairly toward one or more shareholders in their capacities as shareholders, directors, officer or employees.\u201d<\/p>\n
Shareholder oppression is not the only circumstance under which such a lawsuit can be commenced, but the other bases for such a lawsuit are relatively straight forward.\u00a0 Thus, the definition of \u201cshareholder oppression\u201d requires some explanation as that term is interpreted by the courts.<\/p>\n
As defined by New Jersey\u2019s courts, shareholder oppression means conduct which \u201cfrustrates a minority shareholder’s reasonable expectations.\u201d Brenner v. Berkowitz<\/span>, 134 N.J. at 506.\u00a0\u00a0 In determining whether a particular course of conduct has oppressed a minority shareholder, courts will examine the understanding of the parties concerning their roles in corporate affairs. Muellenberg v. Bikon Corporation<\/span>, 143 N.J. 168, 178-9 (1996).\u00a0\u00a0 When reviewing an oppression claim, the courts will consider even non-monetary expectations of the shareholder when determining whether a shareholder\u2019s expectations are reasonable and whether the corporation or controlling shareholders or directors unreasonably thwarted them.\u00a0 One of the most common expectations of a shareholder in a closely held corporation is continuing employment by the corporation and the termination of a shareholder\u2019s position as an employee frequently leads to shareholder oppression litigation.<\/p>\n","protected":false},"excerpt":{"rendered":" As defined by NJ courts, shareholder oppression means conduct which \u201cfrustrates a minority shareholder’s reasonable expectations.\u201d<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[245,99,65,248],"tags":[],"coauthors":[173],"class_list":["post-1270","post","type-post","status-publish","format-standard","hentry","category-corporate-ma-insights","category-pierce","category-insights","category-litigation-insights"],"acf":[],"yoast_head":"\n