There have been several national stories recently related to breach of fiduciary duty and shareholder rights. These cases are often referred to as “shareholder oppression” however, here in California we have no specific cause of action for shareholder oppression. However, California law specifically provides a legal remedy for these types of claims under a claim of breach of fiduciary duty shareholder dispute against majority stakeholders.
What Duties do Majority Shareholders Have to Other Shareholders?
California case law on these issues is quite established. Under a 1969 case – Jones v. H.F. Ahmanson & Co. – the California Supreme Court provided insight into the duties of majority interests:
“[M]ajority shareholders, either singly or acting in concert to accomplish a joint purpose, have a fiduciary responsibility to the minority and to the corporation to use their ability to control the corporation in a fair, just, and equitable manner. Majority shareholders may not use their power to control corporate activities to benefit themselves alone or in a manner detrimental to the minority.”
This “fiduciary responsibility” covers a broad range of adverse actions majority shareholders may attempt to use to their own benefit at the cost of minority interests. It is clear this is a breach of fiduciary duty and shareholder rights under California Law.
The Court went on to say:
“The rule that has developed in California is a comprehensive rule of “inherent fairness from the viewpoint of the corporation and those interested therein.” The rule applies alike to officers, directors, and controlling shareholders in the exercise of powers that are theirs by virtue of their position and to transactions wherein controlling shareholders seek to gain an advantage in the sale or transfer or use of their controlling block of shares.”
“Inherent fairness” provides the experienced shareholder dispute attorneys at the Watkins Firm with the legal strength and consequences (financial damages and other remedies) to take immediate action to protect our client’s investments and interests and hold majority interests accountable for the breach of fiduciary duty and shareholder rights.
Breach of Fiduciary Duty and Shareholder Rights in San Diego and Southern California
The Watkins Firm has more than 40 years of experience in cases involving breach of fiduciary duty and shareholder rights in San Diego and Southern California. If you are concerned about embezzlement, an attempt to merge the corporation with another company to water down (or eliminate) the value of your interest, improper use, commingling, self-dealing, or withholding material facts and access to company information and records you need a proven, experienced San Diego shareholders’ rights attorney.
We invite you to review our podcast Episode 17 – Violation or Breach of Fiduciary Duty, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
