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 New Jersey, shareholder oppression is addressed under the New Jersey Oppressed Minority Shareholder Statute, N.J.S.A. 14A:12-7. This statute provides minority shareholders in closely-held corporations with a means to contest actions by majority shareholders that are considered oppressive, unfairly prejudicial, or that unfairly disregard the interests of the minority shareholders. The statute allows minority shareholders to file a lawsuit seeking relief when they believe they have been squeezed out or frozen out by the controlling shareholders. Remedies under this statute can include the appointment of a provisional director, the ordering of a buyout of the minority shareholder's shares at fair value, or even the dissolution of the corporation in extreme cases. The types of conduct that may constitute oppression under New Jersey law include, but are not limited to, denying access to corporate records, withholding dividends, terminating employment, misusing corporate funds, and manipulating stock values. An attorney can provide guidance on the specifics of a potential claim and the likelihood of success given the circumstances of the case.