The “shareholder oppression” doctrine is a set of legal principles that protect minority shareholders from abuse by the majority. As such, these principles stand in direct contradiction to the central rule of corporate decision making that the will of the majority governs. The doctrine also runs contrary to and can prevail over several other well established legal principles, including the business judgment rule, the employment at will doctrine and derivative claims distinction. More on these later.
The principles protecting the rights of minority equity owners are articulated and implemented differently from state to state, and their implementation often involves a balancing of the rights of the majority to control the business entity’s destiny and the rights of the minority to receive the often unarticulated benefits they anticipated when they joined the enterprise. The rules may vary within a state depending on the type of entity, as well.