The majority of the businesses in the United States are close corporations. Georgia close corporations are classified as having a maximum of fifty shareholders, no publicly traded stock and active management by shareholders. Because close corporations usually employ the shareholders, these companies generally have a more relaxed management style. The downside is that this management model puts the minority shareholders in a situation where they quickly can be faced with “squeeze out” or “freeze out” tactics, that typically result in termination of employment with the company.
Often times, income from employment is the most valuable stake that these minority shareholders have as shareholders. Shares held have no value on the open market. That, coupled with the fact that majority shareholders are unlikely to buy the minority’s shares at a fair price, leaves the minority shareholder with little or nothing upon being terminated. Georgia business law statutes provide protection for minority shareholders faced with this situation. Just as in ordinary corporations, all shareholders in close corporations have the right to inspect the documents pertaining to the company, including, but not limited to, bylaws, shareholder meeting minutes, documentation of actions taken outside of meetings and resolutions related to share classification. In the case of wrongdoing, documents discovered during inspection can provide the required evidence to file a lawsuit against the company.
Additionally, Georgia law states that the majority shareholders have a fiduciary duty to the minority, allowing for minority shareholders to sue for dissolution of the close corporation when these duties are not fulfilled. These suits can be filed if the majority shareholders have acted, are acting or are expected to act in an illegal, fraudulent, oppressive or unfair fashion toward the minority. Minority shareholders also can sue for fair valuation of their shares. Whatever the circumstance, it is critical to seek the counsel of an experienced Atlanta, Georgia Business litigation attorney to resolve shareholder complaints. Having a properly drafted operational agreement can prevent these types of disputes from developing, but if conflicts do arise, a qualified lawyer will ensure that all possible legal avenues are pursued to help the minority shareholder receive fair treatment and compensation under Georgia law.
The Atlanta Business attorneys at The Libby Law Firm provide qualified legal representation in all areas of Business law and litigation. We look forward to meeting with you to discuss your particular case. Please feel free to call our Firm at (404) 467-8611, or toll free at to review your legal options. You can also send us a message through our confidential Web Site form. The Libby Law Firm is conveniently located in the Buckhead section of Atlanta, Georgia near the intersection of Piedmont and Roswell Roads.
Our Business Law Firm also has a Marietta, Georgia Office. Please contact our Marietta business lawyers by calling (770) 952-1008, . Our Marietta Office is oftentimes more convenient for meeting with one of our Georgia business attorneys. This is especially true if the issues are being addressed in the Cobb County Court system.