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November 1, 2017Eric Fryar
Filling in the Gaps: Shareholder Oppression After Ritchie V. Rupe: Part 1
On June 20, 2014, the Texas Supreme Court’s decision in Ritchie v. Rupe1 initiated a seismic shift in Texas law governing the protection of minority shareholders in closely-held corporations and limited liability companies. After almost thirty years of steady appellate court development of a judicial remedy for oppressive conduct against minority shareholders, recognizing the trial court’s power to force an oppressive controlling shareholder to purchase the oppressed minority shareholder’s stock for a fair value, the Texas Supreme Court suddenly announced that no common law cause of action for oppression existed and that Texas courts had no power to order a buy-out under the statutory remedy for oppression. Three dissenting Justices accused the majority of “extinguish[ing] meaningful protections for minority shareholders.” A host of academic articles and continuing legal education papers from practitioners both decried and applauded the demise of the shareholder oppression doctrine. The gloomy assessment: “In the wake of Ritchie, minority shareholders are already having a much tougher time in the courts.”
November 1, 2013George Parker Young, Vincent P. Circelli, Kelli L. Walter
Fiduciary Duties and Minority Shareholder Oppression From the Defense Perspective: Differing Approaches in Texas, Delaware, and Nevada
Suits by minority shareholders in Texas are on the rise and represent an expanding,cutting-edge area of civil litigation in this state and across the country. While the TexasSupreme Court and several appellate courts in Texas have yet to recognize a cause of actionfor shareholder oppression or to define its parameters, a growing number of courts have upheldclaims for shareholder oppression or at least recognized it as a viable claim. But these courts’justifications for recognizing a broad shareholder oppression claim are questionable, becausethey rely on: (1) a Texas Supreme Court case that never blessed shareholder oppression as avalid claim; (2) a Texas receivership statute that allows relief from oppression only in limitedand extreme circumstances; and (3) a Texas appellate court case that relied on the previous twofaulty grounds and on inapplicable case law from other jurisdictions. The Texas SupremeCourt recently granted review to a shareholder oppression case (Ritchie v. Rupe), and willconfront this issue in the very near future. Argument was heard on February 26, 2013.