Shareholder Oppression and Fraud by Deception

Hopkins Centrich Law, Your Shareholder Oppression Law Firm For Fraud and Misrepresentation Claims

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, as well as having managed mergers, acquisitions, and sales.

Hopkins Centrich Law 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 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.

Fraud by Deception Considerations

It’s an unfortunate fact of business life that sometimes the majority owners of a closely held company do not act in the best interest of the company or shareholders. Sometimes this is manifested by a pattern of fraud and misrepresentation.

Here are some key considerations regarding minority shareholder rights and fraud or misrepresentation in a closely held corporation:

• Fiduciary duty - Majority shareholders, directors and officers owe a fiduciary duty to the minority shareholders and the corporation. This includes a duty to provide truthful, accurate information.
• Fraudulent statements - Intentionally providing false or misleading information about the company's finances, operations or projections could constitute fraud.
• Reliance - Minority shareholders may have a claim if they relied on fraudulent statements and suffered harm as a result.
• Misstated financials - Issuing false financial statements misrepresenting the company's assets, liabilities, revenues, or expenses could be grounds for a lawsuit.
• Obligation to disclose - Majority shareholders have an affirmative duty to disclose all material facts, not just avoid making false statements.
• Share value - Misstatements that falsely inflate share value could induce minority shareholders to sell their shares too cheaply.
• Self-dealing - Failure to disclose self-interested transactions with the company could be constructive fraud.
• Derivative lawsuit - If fraud harms the corporation as a whole, a derivative claim may be brought on behalf of the company.
• Damages - The minority shareholders may recover damages for losses suffered due to reliance on fraudulent or negligent misrepresentations.
• Rescission - Shareholders may have grounds to rescind or undo any contracts entered into based on false statements.

What to Do If You Think Your Majority Owners Have Committed Fraud or Misrepresentation

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 still 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 so, the better, there are deadlines for every legal action. The longer you wait, the fewer your legal options.