Agreements to Control Specific Oppressive Conduct and Their Limitations Sample Clauses

Agreements to Control Specific Oppressive Conduct and Their Limitations. Minority shareholders in a closely-held corporation may try to protect themselves against the tyranny of the majority by contract. Typical shareholder agreements include provisions: 87 Xxxxxxxx x. Xxxx, 562 S.W.3d 768, 778 (Tex. App.—Houston [14th Dist.] 2018, pet. denied), citing Argo Data Res. Corp. x. Xxxxxxxxxxx, 380 S.W.3d 249, 274 (Tex. App.—Dallas 2012, pet. denied); Xxxxxx Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 75 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). 88 Id. 89 Id. at 780-81. 90 Id. at 782 • guarantying that some or all of the shareholders will be directors and/or officers of the corporation; • providing employment and perhaps specifying salaries; • detailing how shareholders will vote on specific matters; • requiring that dividends are to be paid; • granting to one or more of the shareholders a veto right on board decisions or board decisions dealing with specific matters; and • setting out how disputes should be resolved (e.g., arbitration or provisional directors in case of deadlock or winding up under certain conditions or votes). While these mechanisms may be useful to prevent certain oppressive behaviors, they are limited in their ability to prevent or remedy oppression. They also all depend upon the very unlikely situation in which a minority owner has both the foresight and bargaining power to obtain these concessions in a shareholder agreement.