Facts
Whetstone was a shareholder in Hossfeld, which consisted of 13 shareholders. Whetstone owned 36% and the president and his wife, individually and as joint tenants, own 50.93%. Hossfeld moved to amend its bylaws by a 2-1 vote; Whetstone was the dissent. Hossfeld refused to buy Whetstone’s shares.
Procedural History
Whetstone filed suit and the trial court granted summary judgment for Whetstone. The Court of Appeals reversed.
Issue(s)
Did the Court of Appeals err in finding that elimination of veto powers is not among the events which entitle dissenting shareholders to receive the fair value of their shares?
Holding(s)
Yes.
Reasoning/Analysis
The Court found that the use of veto power arrangements have long been recognized as a means of providing a minority shareholder in a closely held corporation protection against prejudicial conduct by the majority shareholders. Amendments which eliminate these veto powers unquestionably limits the rights of the minority shareholder. Before the amendments, Whetstone had the deciding vote; after the amendments, Whetstone’s vote was little more than a formality.
Judgment/Outcome
The Court reversed the judgment of the Court of Appeals.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment