Shareholder Oppression after Richie vs. Rupe - VLF Video Educational Series
Vlf Video Educational Series – Shareholder Oppression After Richie vs. Rupe
Charles: Welcome to VLF’s Video Educational Series. Today’s topic is shareholder oppression after Richie versus Rupe. I’m Charles Vethan.
Olivia: I’m Olivia Mallory.
Joseph: I’m Joseph Colvin.
Charles: Olivia the Richie versus Rupee decision is now a little over two years old. Now if you can tell our friends a little bit more about that decision.
Olivia: Sure Charles, the Texas Supreme Court decided basically that minority shareholder oppression was no longer a cause of action.
Charles: How do courts deal with minority shareholder oppression cases today Joseph?
Joseph: Well, as Olivia mentioned, shareholder oppression is no longer a viable cause of action but there are many other tools in a plaintiff’s toolkit to evaluate a claim. Essentially now a minority shareholder needs to bring what’s called a Derivative Breach of Fiduciary Claim on behalf of the corporation against the control person.
Charles: Okay, let’s back up there. We talked about bringing a claim for a majority shareholder, why would this claim ever risen pre-Rupe anyway.
Joseph: Prior to the Richie, Rupe case, there is a line not of supreme court cases but appellate court cases that held under the Texas Receivership Stature a lesser remedy to permit a court order of the buyout of the minority shareholder rather than cause the disillusioned of the entire company in order to rectify the problem.
Charles: Olivia, under the present standard, after Richie versus Rupe was enacted, passed by the Texas Supreme Court, can a minority shareholder force a majority shareholder to buy him or her out?
Olivia: No they cannot Charles. It’s not readily available for minority shareholders.
Charles: What are some of the tools that the minority can use today if he, she or it believes that they are being treated unfairly or improperly by the majority shareholder who effectively controls a private company?