Einde inhoudsopgave
Exit remedies for minority shareholders in close companies (IVOR nr. 82) 2011/3.4.3.3.2
3.4.3.3.2 Fiduciary duty and the interpretation of the statutory oppression remedy
dr. Q. Wang, datum 02-05-2011
- Datum
02-05-2011
- Auteur
dr. Q. Wang
- JCDI
JCDI:ADS407500:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
Thompson, The Shareholder's Cause of Action for Oppression, 48 Bus. Law. Feb, 1993, 699, 700. (noting that the standards used by some courts to determine a breach of fiduciary duty leading to a direct cause of action for the shareholder are substantially the same as the standards used by other courts to define oppression as a ground for involuntary dissolution. In some states, the enhanced fiduciary duty has evolved in the absence of an oppression statute. In other states the statutory remedy has been the dominant legal response. The two doctrines overlap but are not completely interchangeable; there are times when one is preferred to the other.)
Baker v. Commercial Body Builders, Inc., 264 Or. 614, 507 p. 2d 387, 1973.
The late F. Hodge O'Neal and Robert B. Thompson, O'Neal and Thompson's Close Corporations and LLCs: Law and Practice, current through the June 2005 update, s. 9.18.
The late F. Hodge O'Neal and Robert B. Thompson, ibid., current through the May 2006 update, Chapter 3.
Baker v. Commercial Body Builders, Inc., 264 Or. 614, 507 p. 2d 387, 1973.
As explained in the previous section, in the US, courts of states without the statutory oppression remedy apply the concept of enhanced fiduciary duty to tackle oppressive conduct in a close company. But courts of states with a statutory oppression remedy can also use this standard.1
In the Baker case, the Oregon Supreme Court commented that oppression and breach of fiduciary duty were closely related concepts.2 Conduct violating the fiduciary duty is most likely oppressive conduct as well, 3 for example, such actions as appropriation of corporate assets and opportunities at the expense of minority shareholders, siphoning off profits by excessive compensation, termination of a minority shareholder's employment out of self interest and so 0114 As a Colorado court put it, "oppressive conduct is often related to a breach of fiduciary duty, and evidence of breach of fiduciary duty may be considered as evidence of oppressive conduct, but (breach of) fiduciary duty is not the exclusive basis for finding oppression...".5 Therefore, oppressive conduct is analogous to a breach of fiduciary duty.6
In sum, as mentioned above, not every state has a statutory oppression remedy, so those who do not have a statutory oppression remedy apply fiduciary duty to test oppressive conduct; and states with a statutory oppression remedy adopt the fiduciary duty analysis in their interpretation of oppression. Massachusetts, in the absence of a statutory oppression remedy, pioneered in proposing the partnership-like fiduciary duty to regulate oppressive conduct. Its case development has improved the understanding of the interpretation of oppression. We will have a close look at that in the following part.