Shareholder disputes can be among the most difficult and, if not handled properly, costly events in the life of closely held private corporations.
Minority shareholders who feel they have been mistreated typically assert claims for a “fair value” buy-out of their shares under Minn. Stat. § 302A.751 (“Section 751”) and damages for breach of fiduciary duty. Shareholders who also serve as corporate managers or employees are afforded substantial protection under Minnesota law. When such a shareholder’s employment is terminated or the shareholder is otherwise forced from the company, thus losing the compensation that may constitute the primary or exclusive method by which the owners take earnings out of the company, courts are inclined to grant a corporate divorce by requiring a fair value buy-out of the minority shareholder’s stock. In addition to a stock buy-out, plaintiff shareholders in these cases have also been the beneficiaries of large damage awards, which may include damages for breach of contract or for lost earnings/earning capacity, and attorneys’ fees under Minn. Stat. §§ 302A.751 and 302A.467.