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 Massachusetts, minority shareholder oppression is addressed under state law, which recognizes the rights of minority shareholders and provides remedies for oppressive conduct by those in control of closely-held corporations. Massachusetts courts have established that minority shareholders in closely-held corporations are owed a fiduciary duty by the majority shareholders and those in control of the corporation. This means that majority shareholders must act in good faith and with a reasonable degree of fairness in their dealings with the corporation and the minority shareholders. When minority shareholders believe they are being oppressed, they may bring a lawsuit against the majority shareholders or the corporation itself. The types of conduct that may constitute oppression include denying access to corporate records, withholding dividends, terminating employment, misusing corporate funds, and manipulating stock values. Remedies for shareholder oppression can include financial compensation, buyouts of the minority shareholder's interests at a fair value, and in some cases, corporate restructuring. It is important for minority shareholders who believe they are being oppressed to consult with an attorney who is experienced in corporate law and shareholder rights to explore their legal options.