Can a Minority Shareholder Be Removed from the Business in Florida?
A minority shareholder of a closely held corporation has no direct control over the operation business. At the same, a minority shareholder may still be deemed “disruptive” or otherwise a “poor fit” for the business. This raises an important question: Can a minority shareholder be forced out of a business in Florida? As with many legal questions, the answer depends on many different factors. Here, our West Palm Beach shareholder disputes attorneys provide an overview of the key things to know about removing a minority shareholder in Florida.
Always Start With the Shareholders’ Agreement
The shareholders’ agreement is the basis of each party’s rights and responsibilities. In considering the removal of a minority shareholder, it is important to start with a review of the shareholders’ agreement. A well-drafted agreement may include a process for shareholder removal.
Assuming that the shareholders’ agreement does speak to the issue, parties should be prepared to abide by its terms. In many cases, a shareholders’ agreement will address this matter through a buy-out provision. The majority shareholder(s) may have the legal right to buy out a minority shareholder at a predetermined price.
A Settlement is Often the Best Solution
If the shareholders’ agreement does not provide a clear path for the removal of a minority shareholder, the issue becomes more complicated. In the vast majority of cases, the best option for all parties is to find a settlement. Generally, majority and minority shareholders do share some common financial interests. All parties suffer if there is damage to the business.
For this reason, a settlement is often the right solution. Even if the majority shareholder(s) do not have a clear right to buy out minority shareholders, they can still often negotiate an agreement whereby the minority shareholders consent to the sale. If you find yourself in this position, a Florida shareholder law attorney can help you negotiate an agreement that protects your rights and interests.
Florida Law Provides Some Protection to Minority Shareholders
We must emphasize that Florida law provides certain legal rights and legal protections to minority shareholders. As an example, Florida Statutes § 607.1602 gives minority shareholders certain inspections rights over corporate records. In some circumstances, a minority shareholder may even be in a position to bring a shareholder oppression claim against the company.
Majority shareholders and corporate officers should take care not to violate shareholder rights. Otherwise, they face a liability risk. You cannot necessarily “force” a minority shareholder out of a corporation. Amending the corporate bylaws to force a sale could potentially run afoul of Florida state law.
Contact Our West Palm Beach, FL Shareholder Law Attorney for Help
At Pike & Lustig, LLP, our Florida shareholder lawyers work tirelessly to protect the business interests of our clients. If you have any questions about the removal of a shareholder we can help. Call us today for a private initial legal consultation. We handle shareholder disputes throughout Southeastern Florida, including in West Palm Beach, Jupiter, Boca Raton, Boynton Beach, and Miami.