New Mexico Shareholder Law Survey
What follows is a brief survey of New Mexico 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.
New Mexico 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.
As a statutory state, New Mexico has enacted statutory provisions governing shareholder oppression and derivative actions. Some key points:
Yes, New Mexico is considered a statutory state when it comes to shareholder oppression law. Some key reasons why:
Oppression statute - New Mexico has enacted a specific shareholder oppression statute (NMSA 1978, §53-16-16) 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 - New Mexico 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.
While supplemental common law rights may exist, the shareholder oppression statute provides the main framework for these types of claims in New Mexico.
While common law rights may also exist, the shareholder oppression statute in New Mexico provides the controlling legal framework for these types of claims.
Key Things to Remember in New Mexico Shareholder Oppression Matters
There are several key aspects to shareholder actions under New Mexico law that must be considered:
Statutory Basis - New Mexico has a specific shareholder oppression statute, NMSA 1978, §53-16-16, that forms the main basis for claims.
Ownership Threshold - Shareholders must own at least 10% or more of the outstanding shares or voting power to have standing to sue for oppression.
Pleading with Particularity - Complaints must allege the specific acts of oppression with detail and particularity.
Grounds - Conduct must be alleged to be burdensome, harsh, wrongful, or have lacking fair dealing toward minority shareholders.
Futility of Demand - If demand on the corporation is not made, facts showing its futility must be pled.
Direct Suit Requirement - Actions must be brought directly by aggrieved shareholders, not derivatively.
Equitable Relief Available - Remedies under the statute include dissolution and buyouts. Damage awards also permitted.
Attorney's Fees - Plaintiff can recover reasonable attorney's fees and costs if the claim prevails.
Burden of Proof - Plaintiff minority shareholders have the burden to prove oppression by clear and convincing evidence.
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 New Mexico statute (NMSA 1978, §53-16-16):
Breach of Fiduciary Duty - Majority shareholders breach duties owed to the minority through unfair self-dealing or usurping corporate opportunities.
Misapplication of Assets - Wasting, misusing, or improperly distributing corporate assets to benefit the majority owners.
Excessive Compensation - Majority owners pay themselves excessive salaries, bonuses, or other compensation to minimize minority profits.
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 finances, operations, and affairs.
Denial of Voting Rights - Not allowing minority shareholders to exercise their voting rights on material corporate matters.
Misrepresentation - Providing minority shareholders with false, misleading, or inadequate information about the corporation
Diversion of Business Opportunities - Majority owners usurp a business opportunity that rightfully belongs to the corporation.
Lack of Corporate Formalities - Failure to observe corporate formation, documentation and reporting rules and formalities.
Lack of Business Purpose - Taking corporate actions that lack a legitimate business purpose and mainly serve majority owner interests.
If any of this applies to you, please contact us as soon as possible.
