Illinois 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 Illinois 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.

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Minority Shareholder Rights in a Closely Held Company

Illinois 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.

What makes Illinois a Statutory State:

Oppression statute - Illinois enacted a specific shareholder oppression statute (805 ILCS 5/12.56) that provides a cause of action.

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

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

Statutory definitions - The statute defines oppressive conduct rather than relying on common law definition

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 law 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 Illinois Shareholder Oppression Matters

Here are some key aspects of minority shareholder oppression claims under Illinois corporate law:

Statutory Basis - Illinois has adopted a specific shareholder oppression statute, 805 ILCS 5/12.56, that provides a cause of action.

Standing - Shareholders must own at least 20% or more of the outstanding shares or voting power to sue for oppression.

Grounds - Conduct that is unfairly prejudicial, oppressive, or abusively disregards minority shareholder interests constitutes oppression.

Direct Suit - Oppression claims must be brought directly by the shareholder, not derivatively.

Demand Requirement - Demand may be excused if the directors are under the control of the alleged wrongdoers.

Remedies - The court has discretion to order remedies such as dissolution, buyout of shares, or other equitable relief.

Director Liability - Directors who abused their authority and discretion can be held personally liable.

Attorney's Fees - Reasonable attorney's fees and costs may be awarded to a successful plaintiff.

Close Corporation Focus - The law focuses on protecting minority shareholders in close corporations.

Obtaining experienced legal counsel is highly advisable when pursuing an oppression claim under the Illinois statute.

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 Illinois statute (805 ILCS 5/12.56):

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

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

Misapplication of corporate assets - Assets are wasted or improperly used to benefit the majority owners.

Looting - Majority shareholders steal or siphon away corporate assets.

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

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

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 terminating the minority from employment with the company.

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

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

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

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

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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.

Illinois Shareholder Law Survey