Legal Question in Business Law in New York

Re: Minority partner rights when/if company is sold

You have described a situation that seems quite fact-specific; in other words, in order to render full legal advice, one would have to know the nature of the "value" that the minority shareholder contributes such that the majority shareholder "needs" that person in order to maintain a viable entity. This takes an examination of facts that simply is not readily obtainable in this forum.

That said, your question asked whether the 95% shareholder can "take control" over the company and do whatever he feels is in the best interests of the company. First, the 95% shareholder already has control over the company (unless there is an agreement that management of the company does not follow along the lines of ownership). Second, the 95% shareholder can do what he thinks is in the "best interests" of the company as long as he does not breach the "fiduciary duties" that he owes to the minority shareholder, i.e., he must be loyal, exercise due care and provide adequate disclosure of material events. The bottom line, however, is that if the majority shareholder wants to sell the company, he will be able to do so, and the minority shareholder -- if he disagrees with the price for the sale -- can obtain a valuation through the courts.

I hope this provides you with some general information. Please recognize, however, that absent full discussion of the facts, etc., it is simply not possible to provide anything more detailed or concrete.

-- Kenneth J. Ashman; Ashman Law Offices, LLC; 156 West 56th Street, Suite 1920, New York, NY 10019; [email protected]