Shareholder oppression—also known as minority shareholder oppression, squeeze out, or freeze out—is a general term for a claim or cause of action that may be made by a minority shareholder—a shareholder who owns less than a controlling percentage of the company—and is based on the alleged unfair or oppressive treatment of the minority shareholder.

Minority shareholder oppression claims often arise in closely-held corporations—corporations that are not publicly traded; in which a relatively small number of people own most or all of the shares; and in which the shareholders are often family members or people who know each other.

Those in control of a closely held corporation may use various squeeze-out or freeze-out tactics to deprive minority shareholders of benefits; to misappropriate those benefits for themselves; or to induce minority shareholders to relinquish their ownership for less than it is otherwise worth.

The types of conduct most commonly associated with such tactics include:

• denial of access to corporate books and records;

• withholding payment of, or declining to declare, dividends;

• termination of a minority shareholder's employment;

• misapplication of corporate funds and diversion of corporate opportunities for personal purposes; and

• manipulation of stock values.

In Arkansas, shareholder oppression occurs when those in control of a closely-held corporation engage in unfair or oppressive conduct toward minority shareholders. Arkansas law provides remedies for minority shareholders who may be subjected to such oppressive actions. The Arkansas statutes do not have a specific statute addressing shareholder oppression, but courts have recognized the concept under common law. Minority shareholders may seek relief through various legal actions, including claims for breach of fiduciary duty or unfair prejudice. The types of conduct that may constitute shareholder oppression include denying access to corporate records, withholding dividends, terminating employment, misusing corporate funds, and manipulating stock values. When faced with such issues, minority shareholders may petition the court for remedies such as forcing the majority shareholders to buy out their shares at a fair value, awarding damages, or in some cases, ordering the dissolution of the corporation. It is important for minority shareholders in Arkansas to consult with an attorney to understand their rights and the specific legal options available to them in the context of shareholder oppression.