Colorado 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 Colorado 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.

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Minority Shareholder Rights in a Closely Held Company

Colorado is a Statutory State

Statutory states have adopted specific statutes governing minority shareholder oppression claims in corporations. Key characteristics of statutory states regarding shareholder oppression include:

Oppression statute - Colorado has enacted a specific shareholder oppression statute (C.R.S. § 7-114-301) that provides a cause of action.

Statutory remedies - The law provides remedies like dissolution or a forced buyout of shares.

Statutory definitions - The statute defines conduct constituting oppression.

Case precedent - Colorado courts look to the language of the statute in analyzing and applying the law.

Expansion of common law - The statute expands shareholder protections beyond those available under common law.

Standing requirements - The law specifies which shareholders have standing to bring an oppression claim.

Statutory burdens - Burdens of proof are allocated by the statute rather than common law principles.

Director conflicts - The statute dictates when demand on the corporation may be excused due to director conflicts.

Binding precedent - The statutory law takes precedence over any contrary common law rulings.

Legislative intent - Courts attempt to interpret the statute consistent with legislative intent.

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Key Things to Remember in Colorado Shareholder Oppression Matters

There are several key aspects to shareholder actions under Colorado law that must be considered:

Statutory Basis - Colorado has adopted specific shareholder oppression and dissenters' rights statutes that provide causes of action. These statutes form the primary basis for claims.

Standing Requirements - The oppression and dissenter statutes specify which shareholders have standing to bring claims. Certain ownership thresholds must be met.

Demand Futility - The statutes provide guidance on director conflicts excusing demand. Courts also draw from case law.

Pleading Requirements - Complaints must be pled with particularity according to the statutory requirements. Conclusory allegations may be insufficient.

Burdens of Proof - Burdens are allocated by statute rather than common law. Plaintiffs carry the burden on oppression claims.

Director Liability - Directors can be held personally liable for certain misconduct under the statutes.

Equitable Remedies - Courts are authorized to order equitable relief like corporate dissolution or share buyouts under the statutes.

Appraisal Remedy - Dissenter rights to obtain fair value for shares are provided for under the appraisal statute.

Attorney's Fees - Plaintiff's fees may be awarded if provided for in the specific statute under which the claim is brought.

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 main grounds that could support a shareholder oppression claim under Colorado statute (C.R.S. § 7-114-301):

Breach of Fiduciary Duty - Controlling shareholders breach their fiduciary duties owed to the minority shareholders.

Misapplication of Corporate Assets - Wasting, misusing, or improperly distributing corporate assets to benefit the majority owners.

Excessive Compensation - The majority shareholders pay themselves excessive salaries, bonuses, or other compensation.

Denial of Access to Records - Refusing to allow minority shareholders to inspect corporate documents and records.

Withholding Information - Failure to provide minority shareholders with information about corporate activities and financial performance.

Denial of Voting Rights - Preventing minority shareholders from exercising their voting rights.

Misrepresentation - The majority provides minority shareholders with false, misleading, or inadequate information about the corporation.

Diversion of Business Opportunities - The majority usurps a business opportunity that rightfully belongs to the corporation.

Selective Enforcement of Corporate Policies - Policies are enforced against the minority but not the majority shareholders.

Lack of Business Purpose - Taking actions that lack a valid business purpose and only serve the majority’s interests.

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.

Colorado Shareholder Law Survey