California Shareholder Law Survey

Name: Best law firm in town for all of your business needs. Had the pleasure of working with Mr. Centrich and he was very helpful.
Item: Shareholder Oppression
Rating: 5
Author: Kendyl Grupp

What follows is a brief survey of California shareholder law with a focus on minority shareholder rights and relief when those rights have been ignored or violated.

Hopkins Centrich is Greater Houston’s premier firm for shareholder oppression matters. Over the decades we have provided cutting edge, high quality, creative legal solutions for minority shareholders in Texas closely held corporations when the majority owners have abused their rights. We have also worked with clients in law firms across the country in all manner of cases where the rights of minority shareholders have been impinged on and they have suffered loss – economic, intellectual property, goodwill, and more.

Become a Client

Minority Shareholder Rights in a Closely Held Company

California Shareholder Oppression

California is a non-statutory state when it comes to shareholder oppression. In non-statutory states claims primarily rely on common law principles rather than a specific oppression statute. Some of those key characteristics:

Common Law Basis - Claims arise mainly from common law theories like breach of fiduciary duty.

Judicial Discretion - Courts have broad discretion in granting equitable relief based on the circumstances.

Fiduciary Duties - Focus is on fiduciary duties owed between shareholders under common law.

Direct vs Derivative Distinction - Courts decide based on common law whether claims must be direct or derivative.

Reasonable Expectations - Analysis centers on reasonable shareholder expectations under common law.

Flexible Remedies - Range of equitable remedies available rather than set statutory remedies.

Burden Shifting Frameworks - Burden shifting is based on court precedents, not set by statute.

Demand Futility - Demand excusal rules stem from case law interpreting requirements.

Dissolution Standards - Dissolution rights limited based on prior court rulings.

Case Precedent Reliance - Courts look to prior case rulings rather than statutory language for guidance.

View Practice Areas

Options for California Minority Shareholders When Their Rights are Oppressed

Here are some – but not all – of the options minority shareholders have under California law when their rights are being oppressed in a closely held company:

File a direct lawsuit against the majority shareholders and directors alleging breach of fiduciary duty or other common law claims.

Seek damages through the direct lawsuit for any harm suffered due to the alleged oppression.

Request a buyout of the minority's shares at fair market value through the court.

Petition for dissolution or liquidation of the company if the oppression is extreme and irreparable.

Seek alternative equitable remedies like imposition of an independent director or receiver.

Attempt to negotiate a private buyout of shares or other settlement with the majority shareholders.

Explore mediation to resolve issues leading to the alleged oppression.

Review corporate bylaws and agreements for protections that can be enforced.

Call a shareholder meeting to try to remove or elect directors who may address issues.

Allege breach of the covenant of good faith and fair dealing implied in all contracts.

Argue the majority's conduct violates public policy of protecting minority shareholders.

Obtain counsel experienced in shareholder disputes to vigorously advocate minority's rights.

Hopkins Centrich, Your Shareholder Oppression Law Firm For Fraud and Misrepresentation Claims

Hopkins Centrich PLLC provides cutting edge, high quality, creative legal solutions for minority shareholders in Texas closely held corporations when their rights have been abused by the majority owners. Our attorneys and staff have decades of experience in virtually every aspect of business law in The Woodlands and Texas. We have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, as well as having managed mergers, acquisitions, and sales.

Hopkins Centrich knows Texas business law. We are uniquely positioned to help shareholders when they have amble cause to believe their rights are being violated. When we work with a client, our sole focus is on them. We take advantage of everything technology has to offer in order to optimize how we work. That gives us more time to spend with clients, more time to understand the issues, more time to negotiate and prepare for trial. We get that no one wants to contact a law firm unless they feel they absolutely must. When they do, it almost always means that ‘things have reached a head.’

The attorneys and staff of Hopkins Centrich understand what you are going through. We will make the process understandable; you will know what is happening with your case every step of the way and you will never have to track us down for answers.

Have You Experienced Minority Shareholder Oppression?

Minority Shareholder Oppression occurs when the majority shareholders act with prejudice, unfairness, and lack of probity towards the minority thereby frustrating their reasonable expectations as owners.

Here is a concise but by no means exhaustive rundown of some of the grounds that could support legal action when a shareholder’s rights are oppressed by the majority owners of a closely held company in California:

Breach of fiduciary duty - The controlling shareholders breach their fiduciary duties owed to the minority.

Misapplication of corporate assets - Assets are wasted or improperly used by the majority for personal benefit.

Excessive compensation - The majority pays themselves excessive salaries, bonuses or other compensation.

Denial of access to records - Refusing to allow the minority shareholders to inspect corporate documents.

Withholding information - Failure to provide details about corporate activities and financial performance.

Denial of voting rights - Not allowing the minority shareholders to vote their shares.

Interference with employment - Unjustly firing the minority shareholders from employment with the company.

Misrepresentation - The majority provides false or misleading information about company affairs.

Diversion of business opportunities - Usurping a lucrative business opportunity for the majority’s personal benefit.

Freeze-out techniques - Tactics used by the majority to force the minority shareholders out.

Looting - Majority shareholders steal or siphon away corporate assets.

Fraudulent conduct - Defrauding the minority shareholders through deception, false statements, or non-disclosures.

Unfair treatment - Singling out the minority for inferior treatment without valid cause.

If any of this applies to you, please contact us as soon as possible.

View Practice Areas

How We Work

Hopkins Centrich is a team with a deep bench. All our attorneys have extensive litigation experience which they fully use when necessary.

Hopkins Centrich’s attorneys also have ‘big firm’ backgrounds. They formed our firm with the goal of retaining the best and most talented lawyers who would provide a greater and more personal experience for our clients.

We do this by using technology to its fullest. We utilize cutting-edge business processes and methodologies to assure that we can continue to deliver the highest quality legal services to our clients. This, in turn, allows us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative yet flexible legal solutions at competitive fees.

We are creative. We are agile. We quickly adapt to rapidly changing circumstances, including changes in the law.

Hopkins Centrich is dedicated to upholding the rights of minority shareholders. If you feel you are not being treated right and you are invested in a closely held company – money, time, labor, experience, intellectual property, etc. – please call us as soon as possible.

Our vision statement may sum it up best. We deliver highly skilled, ethical and aggressive legal representation to every client by:

Responding promptly to our clients’ needs.
Anticipating business and legal trends that may affect our clients.
Managing our clients’ matters in an efficient, caring and proactive manner.
Communicating regularly and clearly with our clients.

California Shareholder Law Survey