Liquidating a close corporation
The wrongful conduct relates to the shareholder only through the medium of the corporation, i.e., by reducing the value of the shareholder’s stock. It specifies several grounds for judicial intervention and provides a panoply of equitable remedies. (b) In an action by a shareholder when it is established that: . The corporation is a proper and often even a necessary party, because often the corporation takes the formal action which effects the injury. For the close corporation claimant, the key grounds are found in clauses 2 and 3 of subdivision 1(b). Moreover, the corporation is typically the source or focus of the requested relief. The supreme court reversed and remanded, directing the trial court to determine whether the defendants had breached a fiduciary duty by paying themselves back salaries and selling a model home to a director. The essence of the test is whether or not under all the circumstances the transaction carries the earmarks of an arm’s length bargain. 1(b) by substituting as grounds for relief the phrase “in a manner unfairly prejudicial” for the phrase “persistently unfair”); 1983 Minn.
The plaintiff’s allegations suggested that the directors had acted with a conflict of interest. reflects another aspect of the duty of loyalty– the corporate opportunity doctrine. 3 by inserting reference to equitable relief and buy-outs); 1983 Minn.
Part V examines and critiques Minnesota’s current approach to the direct/derivative analysis.
Liquidating a close corporation comments