Duties of Majority Shareholders in Closely Held Companies

The Primary Duties of Majority Shareholders

Here are a few of the primary duties of a majority shareholder in a closely held business:

• Duty of care - Majority shareholders have a duty to make informed decisions in the best interests of the corporation. They must exercise reasonable care and prudence.
• Duty of loyalty - The majority shareholder must put the interests of the corporation first and avoid conflicts of interest and self-dealing.
• Duty of good faith - Majority shareholders have an obligation to act ethically and transparently in their dealings with the company and minority owners.
• Fiduciary duties - Majority shareholders have fiduciary duties because they can control corporate decisions.
• Confidentiality - The majority shareholders should keep sensitive company information confidential.
• Corporate formalities - The majority shareholder should ensure the company adheres to all legal formalities.
• Avoid oppression - The majority shareholders cannot exercise their control in an unjust or harmful way toward the minority.
• Equal treatment - The majority shareholder must not discriminate against the minority shareholder.
• Compliance with laws - The majority must ensure legal and ethical compliance by the company.
• Disclosure requirements - The majority shareholders must comply with all financial reporting and disclosure requirements.
• Adherence to corporate documents - The majority shareholder must comply with by-laws, shareholder agreements, and other governance documents.

The majority shareholder is in a position of trust and must act fairly. Failure to fulfill duties can lead to liability.

Hopkins Centrich Law, Your Shareholder Oppression Law Firm

Hopkins Centrich Law 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, managed mergers, acquisitions, and sales.

Hopkins Centrich Law knows Texas business law. We are uniquely positioned to help shareholders when they have ample 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 you, more time to understand the issues, and more time to negotiate and prepare for trial.

We get that no one wants to contact a law firm unless they feel they absolutely have to. When they do, it almost always means that ‘things have reached a head.’ The attorneys and staff of Hopkins Centrich Law 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.

What to Do If You Think Your Minority Rights are Being Violated

First, do not believe anything you read online, or listen to someone who tells you that the Texas Supreme Court did away with Shareholder Oppression lawsuits. The Court merely limited some of the basis for bringing a Shareholder Oppression action. There are still many avenues to relief available, particularly where the majority shareholders have made decisions that are not In the best interests of the business.

Don’t wait. If you think your shareholder rights have been trampled on don’t hesitate to call. Don’t hope that things change, don’t let a matter fester, don’t try to solve the problem yourself through emails and letters and not-so-calm conversations. Contact us. The earlier you do, the better, there are deadlines for every legal action. The longer you wait, the fewer your legal options.