Closely Held Corporations Under The New Business Corporation Act PDF Download

In Gruenberg v. Goldmine Plantation, Inc., the Louisiana Court of Appeal noted that “[o]ur substantive law...offers no remedy for the minority shareholder with substantial holdings who is out of control and trapped in a close[] corporation.” Such an observation can be explained, at least in part, by the lack of a “shareholder oppression” doctrine in Louisiana -- a doctrine designed to protect minority shareholders in closely held corporations from the improper exercise of majority control. Times, however, have changed. With the passage of the new Louisiana Business Corporation Act (LBCA), Louisiana becomes the fortieth state in the country to provide statutory relief for oppressive conduct. Effective January 1, 2015, minority shareholders in Louisiana closely held corporations who are unjustifiably denied their participatory and financial rights can seek an escape from their “trapped” status by compelling the corporation to purchase their shares. This article examines the oppression provisions of the new LBCA. The provisions reflect a great deal of thought and wisely incorporate many of the developments in oppression law over the past few decades. Moreover, the provisions unquestionably improve the rights of minority owners in Louisiana closely held corporations. While this article is not intended to provide an exhaustive treatment, it does seek to present a summary of the provisions and to call attention to some of the more noteworthy language. Part II discusses the nature of the closely held corporation and explains the national development of the doctrine of shareholder oppression. Part III provides an overview of the LBCA's oppression scheme and an analysis of selected liability and remedy provisions of the statute.