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Colorado Law Protects the Rights of Minority Shareholders

Colorado Law Protects the Rights of Minority Shareholders

March 12, 2022 | 5 min read

Colorado Law Protects the Rights of Minority Shareholders

As we have witnessed on the world’s stage, those who have power sometimes oppress the rights of those who do not possess power of equal measure. Forms of oppression can also occur in the corporate arena, specifically between majority and minority shareholders in closely held corporations. A “closely held corporation” has relatively few shareholders, and their shares are not listed on an exchange nor actively traded by securities brokers. Minority shareholder oppression can happen when majority shareholders’ conduct improperly impairs the rights of the minority (non-control group) shareholders.

Shareholder Oppression

Shareholder oppression occurs when the majority shareholders in a corporation unfairly prejudice the minority shareholders. Shareholder oppression often takes place in non-publicly traded companies. Fortunately, shareholders of closely held corporations have legal protections in Colorado law. Corporate officers and directors have a duty to act in the corporation’s best interests and in the interests of all the shareholders. Those in control:

  • Must conduct themselves with the highest degree of loyalty and trust.
  • Must exercise good faith.
  • Cannot use their power to cause harm to other shareholders.
  • Cannot exclude the rights of the minority shareholders.
  • Cannot benefit at the minority shareholder’s expense.

Examples of Minority Shareholder Oppression

A minority shareholder faces oppression when they are denied their rights or when the majority shareholders are acting against the best interests of the minority. Examples of minority shareholder oppression include:

  • Refusing or limiting access to the corporation’s books and records.
  • Excluding the shareholder from meaningful information about the company.
  • Failing to pay dividends to all shareholders.
  • Forcing the sale of stock.
  • Unfairly increasing compensation to majority shareholders.
  • Terminating employment unfairly.
  • Withholding information.
  • Excluding minority shareholders from discussions and decisions.
  • Blocking minority shareholders from the premises.

Colorado Law Protects Minority Shareholders

Without legal protection, a minority shareholder’s investment and expectations would be subject to the whims of majority shareholders. Colorado law protects all shareholders and takes care to safeguard the interests of minority shareholders. Shareholder rights include, but are not limited to:

  • The corporation will provide shareholders with accurate information.
  • Shareholders will be informed about the sale of substantial corporate assets.
  • The corporation will act to promote the purpose of the corporation.
  • The corporation will not take actions that benefit a group of shareholders at the expense of another group of shareholders.
  • Shareholders will be informed of material information (negative and positive) when entering a transaction with the corporation.

You May Be Entitled to Recover Damages

If you are a minority shareholder of a corporation and have suffered damages by others within the corporation or by the corporation itself, reach out to our business and commercial litigation lawyers at Burg Simpson for help now.

Our business and commercial litigation attorneys at Burg Simpson have extensive experience in protecting shareholder rights. Our trial attorneys have helped enforce the rights of shareholders facing unjust corporate acts and have obtained recovery of damages for shareholders who have already incurred damages.

Call Burg Simpson for Help Now

The award-winning commercial litigation lawyers at Burg Simpson represent clients with ownership, partnership, and shareholder disputes. Our trial attorneys have the skills and experience to help you mitigate these kinds of business issues. If you are a shareholder or minority owner of a corporation and you have suffered due to the actions or inactions of other shareholders or the corporation, you may be entitled to damages. Contact the commercial litigation team at Burg Simpson now to discuss your shareholder rights.

Burg Simpson’s Commercial Litigation Trial Lawyers

  • About David P. Hersh

Dave is a shareholder and the firm’s Commercial and Business Litigation Practice Group co-leader. He focuses his practice on complex commercial matters involving contract disputes, breach of fiduciary duty, ownership disputes, construction matters, “bet your company” litigation, and professional negligence. For more than 35 years, Dave has focused his practice on civil trial work. He thrives on handling complex civil cases in State and Federal Courts around the country, presenting them simply, effectively, and persuasively to a jury. Dave has tried well over 100 civil jury trials to verdict and has “tried” scores of civil arbitrations and bench trials to their conclusion, with an outstanding “win” record in all venues. Dave is admitted to practice in Colorado and Wyoming and numerous Federal Courts, including the United States Supreme Court.

Burg Simpson shareholder David K. TeSelle is the firm’s Commercial and Business Litigation Practice Group co-leader. Mr. TeSelle has successfully tried numerous cases to jury verdicts in state court, federal court, and private arbitration and practices before the U.S. District Court for the District of Colorado and the U.S. Court of Appeals 10th Circuit. In 2019, he was lead counsel on one of the largest personal injury jury verdicts in Arizona’s history and secured a judgment of $58.5 million. He also represents and provides guidance to state and federal whistleblowers under the False Claims Act (Qui Tam Actions) when they expose fraud against state and federal governments. Following the 2008 economic collapse, Mr. TeSelle battled some of the nation’s largest banks in litigation regarding “The Big Short” cases. He is currently a lead lawyer among a consortium of lawyers seeking fair compensation for “Gold Star Families,” Veterans, and their families killed or injured in terror attacks while serving in Iraq. Mr. TeSelle has represented both plaintiffs and defendants throughout his career and has recovered hundreds of millions of dollars for his clients.

About Burg Simpson Eldredge Hersh & Jardine

One of America’s foremost plaintiff trial firms, Burg Simpson Eldredge Hersh & Jardine, has a longstanding national reputation for fighting relentlessly and successfully for victims of negligence, malfeasance, malpractice, and abuse. Our award-winning attorneys have never hesitated to fight for our client’s rights and consistently face and defeat formidable adversaries, including big insurance companies, big banks, and big pharma. As a result, Burg Simpson has secured more than $2.7 billion in verdicts, settlements, and judgments in practice areas spanning catastrophic personal injury, mass tort and class actions regarding gas explosions, dangerous pharmaceutical drugs and devices, medical malpractice, complex commercial and business litigation, construction defects, and workers’ compensation. The firm’s success has also included over 200 recoveries of more than $1 million. Burg Simpson Eldredge Hersh & Jardine now has 70 lawyers and over 90 legal professionals. The firm is based in Colorado and has offices in Arizona, Florida, Nevada, New Mexico, Ohio, California, and Wyoming.

Submit a Free Case Evaluation Now

Access our website to fill out our free case evaluation at burgsimpson.com or call us now at 303-792-5595. Our business and commercial litigation attorneys are here to help you resolve your legal matter in the best way possible.