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 Delaware, shareholder oppression claims are addressed under state corporate law. Delaware courts have established a high standard for proving oppression, focusing on the concept of 'fiduciary duty' that majority shareholders owe to minority shareholders. The Delaware General Corporation Law (DGCL) does not explicitly define shareholder oppression, but courts have interpreted actions that are against the principles of fair dealing or involve fraud, mismanagement, or abuse of authority as potentially oppressive. Minority shareholders in Delaware may seek relief through the Court of Chancery, which has broad discretion to remedy situations of unfair treatment. Remedies may include forcing the payment of dividends, ordering the inspection of books and records, or in extreme cases, the dissolution of the corporation. However, Delaware courts generally favor internal corporate governance and dispute resolution mechanisms, such as shareholder agreements, over judicial intervention. Minority shareholders are encouraged to seek the advice of an attorney to navigate the complexities of Delaware corporate law and to determine the best course of action based on the specific circumstances of their case.