Fiduciary Duty, Minority Shareholders, Business Litigation

Capital Call Cancelled: A Fairness Defense to the Majority’s Mandatory Capital Call

Farrell Fritz, P.C. on 7/14/2025

There is perhaps no provision in an LLC operating agreement more susceptible to abuse than one allowing those in control of the LLC to make mandatory capital calls. For one, that authority often comes with very few...more

Delaware Court of Chancery Allows Amendment of LLC Agreement to Permit Disparate Consideration Where Amendment Provisions Were...

Troutman Pepper Locke on 5/30/2025

In Faiz Khan and Ralph Finger v. Warburg Pincus, LLC et al., the Delaware Court of Chancery held that the implied covenant of good faith and fair dealing was not applicable to a private equity sponsor’s amendment of a limited...more

Delaware Supreme Court Holds Business Judgment Governs Decision to Reincorporate Outside of Delaware For Purpose of Reducing...

Sheppard Mullin Richter & Hampton LLP on 2/13/2025

In Maffei v. Palkon, No. 125, 2024, 2025 Del. LEXIS 51 (Del. Feb. 4, 2025) (Valihura, J.), the Delaware Supreme Court held that a corporation’s decision to reincorporate in another state purportedly to reduce exposure to...more

Can a Shareholder Be Oppressed After Ceding Control? Oppression, Reasonable Expectations, and Contractual Formalism

Farrell Fritz, P.C. on 1/13/2025

One of the first business divorce cases that I participated in as a young litigator was a lengthy arbitration over whether a minority shareholder was oppressed under BCL 1104-a. With those fond memories, evolution of the...more

Delaware Supreme Court Holds MFW Is Applicable To Controlling Stockholder Transactions Even Outside Of Freeze-Out Context

A&O Shearman on 4/9/2024

On April 4, 2024, in an opinion authored by Chief Justice Collins J. Seitz, Jr., the Supreme Court of Delaware sitting en banc held that the framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014)...more

Driving Between the Lines: As a Private Company Majority Owner, What Are the Rules for Dealing with Minority Business Partners

Bradley Arant Boult Cummings LLP on 11/21/2023

The one who has the gold often makes all the rules, but the majority owner of a private company who has minority partners in the business does not have complete freedom, because majority owners owe duties that apply to their...more

Bad Things Can Happen When You Steal a Business from a Minority Co-Owner

Farrell Fritz, P.C. on 10/30/2023

Occasionally, we come across court cases in which the majority owners so egregiously mistreated their minority co-owners that it’s difficult not to write about it — if only as a lesson in what not to do to separate oneself as...more

Eastland Redux: Do Close Corporation Shareholders Have a Direct Claim Against Directors For Taking Disguised Distributions?

Farrell Fritz, P.C. on 9/11/2023

Earlier this year, using as a springboard the Maryland intermediate appellate court’s decision in Eastland Food Corp. v Mekhaya, I posted about a topic on which there’s little or no New York law, viz., whether a complaint for...more

Post-Trial Oracle Ruling Provides a Roadmap for Navigating Transactions With an Influential Fiduciary on Both Sides of the Deal

Skadden, Arps, Slate, Meagher & Flom LLP on 6/12/2023

The mere potential for a prominent, highly respected officer, director and minority holder to influence a board’s decision to approve a deal where the minority holder sits on both sides is insufficient to confer controller...more

The Hazards of 'Weaponizing' Capital Call and Dilution Provisions

Robson & Robson, P.C. on 5/31/2023

There are many ways that an owner of a closely-held business can use their superior financial resources to gain an advantage over their co-owners in a dispute. One common way is the use of a capital call provision to dilute...more

Pennsylvania’s Alternative Path For Minority Shareholders Who Can’t Pass Federal Rule Of Civil Procedure 23.1’s “Adequate...

Robson & Robson, P.C. on 1/9/2023

When shareholders of a company believe the leaders of the company have breached their fiduciary duties to it, they can bring a lawsuit against those leaders in one of two ways. Shareholders can bring the suit in their own...more

But What of the Equitable Accounting?

Farrell Fritz, P.C. on 3/21/2022

I can’t say what the number is, but my own experience tells me that a significant percentage of lawsuits by a minority owner of a closely-held company against those in control of the company include a demand for an...more

The Minority Shareholder’s Arrows Are Still Sharp in the Quiver: Claims Available to Oppressed Minority Shareholders under Texas...

Bradley Arant Boult Cummings LLP on 3/8/2022

The seven-year anniversary of the Texas Supreme Court’s decision in Ritchie v. Rupee has come and gone, and the court’s holding from 2014 remains the law: Minority shareholders in Texas private companies do not have a cause...more

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