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 South Dakota, shareholder oppression occurs when those in control of a closely-held corporation engage in unfair or oppressive conduct toward minority shareholders. The state recognizes the rights of minority shareholders and provides them with legal remedies to address such oppressive actions. South Dakota Codified Laws (SDCL) contain provisions that protect minority shareholders, including the right to inspect corporate records and the ability to bring a lawsuit for equitable relief or damages when they face oppressive conduct. This may include denial of access to corporate books, withholding dividends, termination of employment, misapplication of corporate funds, and manipulation of stock values. Minority shareholders in South Dakota can seek relief through the courts, which may include ordering the majority shareholders to buy out the minority's shares at a fair value, awarding damages, or imposing other equitable remedies to address the oppressive conduct.