Rights of Minority Shareholders Under Florida Law

Disagreements among fellow shareholders can lead to serious legal conflicts that might put the underlying business in jeopardy. While partners generally have a heightened fiduciary duty to each other, the same does not apply to shareholders in Florida. When a dispute erupts, a controlling shareholder might deploy their power in a manner that is objectionable to others possessing an ownership stake. There are methods in which minority shareholders can protect their interests, but their effectiveness depends on numerous factors.

Concerns about minority shareholder oppression should be addressed long before a problem arises. Optimally, a fair framework can be established in the shareholder agreement. If someone has the majority stake in your company, you might want to negotiate for terms that guarantee that you’ll have some say in the management of the enterprise. Another way to safeguard your interests is to include detailed language about dividend distribution, and a buyout provision that allows you to receive fair value if you give up ownership. 

Sometimes, a suitable remedy does not exist in the shareholder agreement for the actions committed by the majority owner. In these cases, one of the following options might offer the best chance at a successful outcome:

• Breach of fiduciary duty claim — Though the law does not include a heightened fiduciary duty as in a partnership, minority shareholders can bring a claim alleging that the controlling party is shirking their legal responsibility and acting in their own self-interest.
• Share appraisal and repurchase — Oppressed stakeholders might choose to petition the court for an appraisal of their shares. Once the fair value is established, the company could be ordered to repurchase what they own.
• Petition for dissolution — In extreme cases, minority shareholders might request legal action to dissolve the company. Of course, taking this step could negatively affect their interests as well. 

Each shareholder dispute has unique circumstances, but it is always wise to seek legal counsel from a qualified attorney as soon as a concern arises. A lawyer familiar with business ownership disputes can construct a strategy tailored to your situation and objectives.

H. Clay Parker, Esq. The Florida Lawyer in Orlando has extensive experience representing Florida clients in conflicts involving fellow shareholders and partners. Call our firm at [ln::phone] or contact us online to schedule a consultation.