As discussed in several previous posts (here and here), Iowa law recognizes the existence of fiduciary duties between majority and minority shareholders in Iowa corporations. See Linge v. Ralston Purina Co., 293 N.W.2d 191, 194 (Iowa 1980); see also Cookies Food Prods., Inc. v. Lakes Warehouse Distrib., Inc., 430 N.W.2d 447, 451 (Iowa 1988). Often, however, the question is not whether a fiduciary duty exists, but rather, what does the majority-minority fiduciary duty require? In other words, what action(s) or inaction(s) amount to a violation of the majority-minority fiduciary duty?
On September 3, 2013, the United States Court of Appeals for the Eighth Circuit applied Iowa law to address one unique scenario and answer the following fiduciary-duty question: When a majority shareholder sells all of his/her ownership interests in a corporation, is the majority shareholder required – in discharging his/her fiduciary duties – to notify the minority shareholder of his/her intent to sell the majority interest? Continue reading