Legal Question in Business Law in California

The first question is about the composition and activity of the board of directors. In a corporation with two shareholders, there must be at least two directors. If the corporation has three shareholders, there must be at least three directors. Since the board of directors has the right and authority to manage the company and exert power, the analysis of this company should start with whether the board is large enough and is exercising its authority properly.

A minority shareholder has certain rights, defined in the Corporations Code and in decisions of courts dealing with abuse of corporate power. Perhaps you would have sufficient grounds to attack the majority holder in a lawsuit, particularly if there is tax fraud or other impropriety in the management of the company.

As a general matter, however, there is no provision of law that I know of that would allow a dissident minority shareholder to dump his stock or otherwise "exit" the corporation. If you hold any offices (as officer, director), you may want to resign, and that's always your right.

You may have a claim for breach of fiduciary duty against the majority shareholder. I have seen cases where the settlement of that type of claim involves a buy-out of the minority shareholder. That, however, is a matter of negotiation and is not something you can force the majority shareholder to do.

Unfortunately, if you can't resolve it yourself, that is what lawyers and lawsuits are for. If serious about hiring counsel to help in this, and if this is in SoCal courts, feel free to contact me. I�ll be happy to help fight and get the best outcome possible.

I agree with the answers you have received. You do have rights as a shareholder, but the only way to effectively enforce them is to make certain demands on the majority shareholder, and if they are not properly met, to proceed to have a claim filed to protect your interests. We often find that the initial demands will result in the majority owner consulting with counsel, then coming to the table to try to resolve the issues.