Georgia Shareholder Law Survey
What follows is a brief survey of Georgia 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 their rights have been abused by the majority owners. 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.
Georgia 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 - The state legislature has enacted a statute expressly addressing shareholder oppression causes of action.
Statutory remedies - The law provides statutory remedies for oppression, such as dissolution or a forced buyout of the minority's shares.
Here are some key aspects of minority shareholder oppression claims under Delaware law:
Common Law Basis - Delaware oppression actions are based on common law fiduciary duties rather than a specific statutory cause of action.
Direct vs Derivative - Claims must be brought directly by the minority shareholder unless the harm is to the corporation itself.
Demand Futility - A demand on the corporation may be excused if the directors are not disinterested or independent.
Burden Shifting - Burden is on the defendant directors to prove entire fairness of interested transactions.
Remedies - Delaware courts have discretion to order a broad range of equitable and monetary remedies tailored to the circumstances.
Dissolution - Dissolution is available but limited to situations of entire deadlock between 50/50 shareholders.
Director Conflicts - Mere disagreement between shareholders is insufficient for oppression absent evidence of misconduct.
Reasonable Expectations - Analysis focuses on whether minority's reasonable expectations as a shareholder were frustrated.
Fiduciary Duties - Controlling shareholders have a fiduciary duty to treat minority shareholders fairly and equitably.
Judicial Discretion - Courts have broad discretion in granting relief based on the facts of the case.
Key Things to Remember in Georgia Shareholder Oppression Matters
There are several key aspects to shareholder actions under Georgia law that must be considered: Here are some key aspects of minority shareholder oppression claims under Georgia corporate law:
Statutory Basis - Georgia has a specific shareholder oppression statute, O.C.G.A. §14-2-940, that provides a cause of action.
Standing - Minority shareholders must have at least 25% voting power to file an oppression lawsuit.
Direct Suit - Oppression claims must be brought directly by the minority shareholder, not derivatively.
Demand Requirement - Demand on the corporation may be excused if the directors are controlled by the alleged oppressors.
Remedies - Successful claimants may obtain damages, dissolution, or a court-ordered buyout of their shares.
Burden of Proof - The minority shareholder carries the burden of proof to establish oppression.
Director Liability - Directors who abuse their authority and discretion can be held personally liable.
Attorney's Fees - Reasonable attorney's fees may be awarded to a plaintiff who prevails.
Close Corporation Focus - The law is focused on protecting minority shareholders in close corporations.
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 Georgia's oppression statute (O.C.G.A. §14-2-940):
Fraudulent conduct - Deception or misrepresentation by the majority towards the minority shareholders.
Illegal conduct - Violating laws, regulations, bylaws, or legal obligations for the majority's benefit.
Misapplication of assets - Wasting corporate assets or improperly distributing/valuing assets.
Usurping business opportunities - Majority shareholders take a business opportunity for themselves that should belong to the company.
Unequal treatment - Discriminatory application of corporate policies and rules between the majority and minority.
Breach of fiduciary duties - Actions by the majority that breach the fiduciary duties owed to the minority shareholders.
Acting without valid business purpose - Taking actions that have no valid business objective other than benefiting the majority.
Concealing or withholding information - Refusing to provide financial information or notice of shareholder meetings to the minority.
Preventing share transfers - Unreasonably blocking the minority from selling or transferring their shares.
Termination of minority employment - Firing minority shareholders from company employment without cause.
Amending bylaws to reduce minority rights - Changing the bylaws in a way that is detrimental to the minority shareholders.
If any of this applies to you, please contact us as soon as possible.
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.
