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The Top Three Reasons Why Minority Shareholder Sue Corporate Officers

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Broadly defined, a minority shareholder is any shareholder who holds less than 50 percent of the total value of a corporation’s shareholder. A minority shareholder may be someone who owns a 40 percent stake in a mid-sized, closely held corporation. Alternatively, a minority shareholder may be someone who owns far less than 1 percent of a major multinational company.

Minority shareholders have limited ability to control the affairs of the corporation. They must put faith in the hands of officers and directors. Sadly, that trust is sometimes abused by corporate insiders. In this blog post, our Miami shareholder dispute lawyers highlight the top three reasons why minority shareholders sue corporate officers/directors.

Three Reasons Why Minority Shareholders Might Sue Corporate Officials

  1. Breach of Fiduciary Duty 

A fiduciary duty is the highest standard of care under federal and state law. In effect, a fiduciary has a legal burden to do what is best for another party—even above their own personal best interests. Officers and directors of a corporation are a fiduciary of the company. In effect, this means that they must use their privileged, insider status to do what is best for corporations. If a corporate official violates their fiduciary duty, it can cause serious damage to the company’s shareholders. A minority shareholder may be able to hold them accountable for this misconduct through a shareholder derivative lawsuit. 

  1. Shareholder Oppression 

Shareholder oppression occurs when majority shareholders of a corporation—often with the help of corporate officers and corporate directors—take action designed to unfairly prejudice minority shareholders. In some cases, they may even try to push minority shareholders out of the business at an unfair, below market price. While Florida does not have a specific statutory claim for shareholder oppression, the concept itself is still relevant under state law. If you have any questions about filing a shareholder oppression claim as a minority shareholder, contact our Miami attorneys for immediate assistance. 

  1. Denial of Access to Corporate Records

In Florida, one of the primary legal rights that minority shareholders have is the ability to access/inspect certain corporate records. Under Florida Statutes § 607.1602, there are procedures in place for minority shareholders who wish to access records, including corporate books. When corporate officers and directors wrongfully deny a minority shareholder the ability to inspect records in violation of Florida law, legal action may be necessary. If you have any questions about reviewing corporate records as a minority shareholder in Florida, an experienced Miami shareholder rights lawyer can help.

Consult With a Miami, FL Minority Shareholder Rights Attorney Today

At Pike & Lustig, LLP, our Florida shareholder dispute lawyers have extensive experience representing minority shareholders. If you have any questions about breach of fiduciary duty, shareholder oppression, or any other related matter, we can help. Call us now or connect with us online for a private appointment. From our offices in West Palm Beach and Miami, we advocate for the rights of minority shareholders throughout South Florida.

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