When Majority Owners Turn on Their Partners In closely held corporations and limited-liability companies, majority owners sometimes forget that they owe duties to their partners. We see the same pattern again and again: a founder who built a business is gradually cut out of key decisions, denied access to financial…
Summary: After a founder dies, survivors often pivot from “we have a buy‑sell” to “we can force a redemption under the articles.” Courts care about doing it right—and about protecting the estate’s reasonable expectations. Start with the contract you actually signed.A written buy‑sell controls if it exists and is enforceable.…
Under Illinois law, defenses for a partner accused of breaching fiduciary duties to the partnership and his other partners can be varied and nuanced (LID Associates v. Dolan, 324 Ill.App.3d 1047 (2001)), (Pielet v. Hiffman, 407 Ill.App.3d 788 (2011)). Here are some potential defenses: 1. Compliance with Partnership Agreement: A partner who…
In Illinois, the protections for minority shareholders or LLC members from breaches of fiduciary duty in closely held companies can be found in a combination of statutory provisions and case law. Firstly, the Illinois Limited Liability Company Act (805 ILCS 180/15-3) specifies that a member of a manager-managed LLC does…
In Illinois, the concept of LLC member or shareholder oppression is generally conceived as actions that are “illegal, oppressive, or fraudulent”. For shareholders of a corpo”ration that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a…
In the business world of closely held companies in Illinois, minority shareholders often find themselves vulnerable to what is known as a “freeze out” or “squeeze out.” This blog post delves into this phenomenon, exploring what it means, how it happens, and the legal backdrop in Illinois that governs such…
In Illinois, the situation regarding LLC minority members bringing a derivative lawsuit for member oppression is quite specific. The Illinois Limited Liability Company Act allows LLC members to file a derivative action to protect the interests of the LLC. This is particularly relevant when the LLC itself has a cause…
When a shareholder or LLC (Limited Liability Company) member faces a “freeze-out” or “squeeze-out,” they are typically being pushed out of the company’s decision-making process or their economic interests are being diminished. This can be a challenging and complex situation, requiring a careful and strategic approach. Here are some general…
Excessive management fees charged by a majority owner can potentially be the basis for a derivative lawsuit in certain circumstances. In corporate law, a derivative lawsuit is a legal action brought by shareholders on behalf of a corporation against third parties, often including insiders such as officers, directors, or controlling…
The duty of oversight, often referred to within the context of corporate governance, is a critical aspect of the responsibilities of a corporation’s board of directors. This duty is essentially the requirement that board members are attentive to and oversee the business and affairs of the corporation, including its compliance…