The Power Paradox: The Need for Alternative Remedies in Virginia Minority Shareholder Oppression Cases

Stephanie Martinez *

Without advanced planning, minority shareholders in a closely held corporation can find themselves in the unenviable position of being up a creek without a paddle. Minority shareholders often invest in a corporation with the belief that the investment will provide them with a steady stream of income, either from a job or from payment of dividends.[1] Yet many fail to protect themselves with employment contracts or buy-sell agreements,[2] leaving them vulnerable to a majority shareholder who may decide to fire them or withhold dividends.[3] Without a source of income, a minority shareholder can face an indefinite period when there is no return on his or her investment.[4]

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*   J.D., 2014, University of Richmond School of Law; B.A., 2010, James Madison University. A special thank you to Professor Jessica Erickson, who never seemed to tire of my constant questions and office visits. I am also deeply indebted to the staff of the University of Richmond Law Review, who spent countless hours, during the summer no less, working on this comment. Finally, I would like to thank my friends and family, and especially my husband Jonathan, for their support and encouragement.

[1].    See Robert B. Thompson, The Shareholder’s Cause of Action for Oppression, 48 Bus. Law. 699, 702 (1993).

[2].    See Michael K. Molitor, Eat Your Vegetables (Or At Least Understand Why You Should): Can Better Warning and Education of Prospective Minority Owners Reduce Oppression in Closely Held Businesses?, 14 Fordham J. Corp. & Fin. L. 491, 495–96 (2009).

[3].    Thompson, supra note 1, at 703.

[4].    Id.