QUESTION
Does a minority shareholder in a privately held C corp. have any rights or liabilities?
Asked on Sep 11th, 2014 on Business Law - Massachusetts
More details to this question:
I own a minority of a C corporation that is held private and left of my own accord assuming the other shareholders would buy me out. I asked for my percentage of the previous single years' earnings and received no response. I left as VP and since then have had no notifications of any meetings or financial statements. Do I have any rights.....or liabilities as a minority shareholder?
1 ANSWER
Yes. You have whatever rights are specified in your shareholders' agreement and the applicable statutes. Although I am not familiar with Massachusetts statutes, I am certain that (unless contradicted by the shareholders' agreement) they provide you with the right, among other things, to share in shareholder distributions (although not in distributions made as compensation for services rendered; in other words, the other shareholder can receive reasonable compensation for his/her services running the business without having to pay you, but he/she can't receive a stock dividend without you also receiving a pro rata dividend), review corporate books and records and, under certain circumstances, compel a dissolution of the corporation, accompanied by liquidation of corporate assets and distribution of the proceeds to the shareholders.
Answered on Sep 11th, 2014 at 1:12 PM