The Relief You May Seek if You Are Suffering From Shareholder Oppression

images-11.jpegSo you’re suffering from shareholder oppression and you’re hoping relief is available; what relief may you seek in Iowa?  

Shareholder oppression may be difficult to “diagnose” (read more here), but once diagnosed and similar to any other ailment, the next logical question is, what relief is available?  Fortunately, for business owners suffering from shareholder oppression, Iowa’s courts have recognized several forms of relief that may be granted.  The following is a non-exclusive list of remedies that a court may fashion upon a finding that you have been oppressed as a shareholder:

  1. Dissolve the Iowa corporation (Iowa Code Section 490.1430);
  2. Appoint a receiver to wind up and liquidate the business (Iowa Code Section 490.1432);
  3. Appoint one or more custodians to manage the business and affairs of the corporation (Iowa Code Section 490.1432);
  4. Shareholders may elect, in lieu of dissolution, to purchase shares at fair value (Iowa Code Section 490.1434(1)-(3));
  5. The court may stay proceedings and order purchase of shares at fair value upon application of any party (Iowa Code Section 490.1432(4)-(5));
  6. The court may order payment of increased compensation to a plaintiff that he/she would have received had he/she not been denied promised employment (Holden v. Constr. Mach. Co., 202 N.W. 2d 348, 363-64 (Iowa 1972));
  7. The court may enter an order requiring majority shareholders to purchase minority shares at fair market value despite lower share value set by corporate bylaws (Maschmeier v. Southside Press, Ltd., 435 N.W. 2d 377, 382 (Iowa Ct. App. 1988)); and
  8. The court may enter an order requiring dissolution of the corporation at a specified future date, to become effective only in the event the stockholders fail to resolve their differences prior to the date (Baker v. Commercial Body Builders, Inc., 264 Or. 614, 507 P.2d 387,395-96 (1973)).

Notably, the Iowa Supreme Court recognized that “[i]n fashioning appropriate remedies, we have explained that trial courts should regard requests for general equitable relief with considerable liberality.”  Baur v. Baur Farms, Inc., 832 N.W.2d 663, 678 (Iowa 2013).  In other words, Iowa’s courts are given great discretion in fashioning appropriate relief to oppressed shareholders.  However, in fashioning such relief, courts must be “careful when determining relief to avoid giving the minority a foothold that is oppressive to the majority.”  Id.  

The foregoing demonstrates that if you are suffering from shareholder oppression and you are seeking relief for your unfortunate diagnosis, Iowa’s courts are equipped with the ability of prescribing several different forms of relief.  If you believe you are suffering from shareholder oppression and you have decided you need to seek a remedy or better understand your rights, you should consider an initial consultation with a corporate dispute attorney.


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About Matthew McKinney

Attorney focused on civil and commercial litigation.
This entry was posted in Business Owner, Director, Intra-corporate dispute, Litigation, Manager, Member, Shareholder and tagged , , , , , , , , , , . Bookmark the permalink.

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