3.4.3.4.1 General introduction

The idea of using `defeat of reasonable expectations' as a standard to determine oppressive conduct was first employed by British judges,1 and has sine then been developed in several significant cases in the US. Now it is recognized and adopted by many states in the US. Massachusetts and other states which apply fiduciary duty to address shareholder oppression, now often use the defeat of reasonable expectations as wel1.2 Branson comments: "the adoption and spread from jurisdiction to jurisdiction of the "denial of reasonable expectations" as a test of what constitutes oppression, has been the most important development in the closely held corporation field over the last 20 years."3 The New York court has pioneered in developing the contours of oppression by the notion of defeat of reasonable expectations, and has made a list of common expectations held by the minority shareholders: entitlement to employment, return on corporate earnings, and a voice in management.4 Given the special characteristics of the close corporation, courts are more willing to grant protection and to construe the scope of oppressive conducts more broadly than in the case of public corporations.

In the following part of this section, significant and influential cases which contribute to a better understanding of the development of the reasonable expectations doctrine in the US will be presented. Certain issues regarding how to define reasonable expectations and the relationship between the enhanced fiduciary duty and the reasonable expectations will also be discussed.