BALANCE AMONG SHAREHOLDERS WITH SIMILAR POWER AND INTERESTS Sample Clauses

BALANCE AMONG SHAREHOLDERS WITH SIMILAR POWER AND INTERESTS. In a close corporation, two or more not controlling shareholders could constitute a majority whose primary objective is to assure that the parties in the agreement will make decisions concerning the corporation together72. In fact, no shareholder has majority over the other shareholders by him/herself. The corporation has a control group composed of a small number of shareholders instead of a controlling shareholder73. In this case, the existence of equilibrium among shareholders is a feature of the business agreement74. Shareholders want to maintain the control of the corporation regardless of the changes in the future. At the same time, shareholders in a close corporation expect to have employment, role management and return on their investment75. In addition, 68 XxXXx X. xxx xxxXx Xx. & Xxxx X. xxxXXx, The Evolving Fiduciary Duty Solution for Shareholders Caught in a Closely Held Corporation Trap, 18 N. Ill. U. L. Rev. 239, 258 (1998) (explaining that “[f]reeze-out” and “squeeze-out” are labels used in the case decisions without identifying any clear difference in meaning between the two. For purposes of this article, a “freeze-out/squeeze-out” is actionable conduct by which a particular shareholder is excluded form, or severely limited in, his or her participation in the financial benefits and other “partner attributes” of shareholding in a closely held corporation, so as to destroy or drastically impair the value of its stock ownership. Often, this ultimately is accompanied by an attempt to force the shareholder to sell its stock in the corporation, usually at a price favorable to the buyer.”). See Xxxx, supra note 36, at 758.(commenting that “[c]ommon freeze-out techniques include the termination of a minority shareholder’s employment, the refusal to declare dividends, the removal of a minority shareholder form a position of management, and the siphoning off of corporate earnings through high compensation to the majority shareholder.”). 69 XXxxxXx et al, supra note 44, at 771 (suggesting that “[t]he best protection that can be extended a client about to enter into a corporate venture is a well-drawn agreement between shareholders designed to safeguard their interest on a mutually fair basis. This is not a guarantee against litigation –since law suits have been generated concerning the application and interpretation of such agreements, but such law suits are comparatively small in number.”). 70 O’NEil and XXxXxxxx, supra note 6 at 5:2, 5:5. Xxxxxxxxxx...