The Stop Shareholder Oppression (SSO) is intended to gather experiences from oppressed minority shareholders in closely held businesses. These experiences will be used to implement reasonable fairness laws via Maryland statute changes. The Court of Howard County, MD recognizes a minority shareholder in a closely held business as an At-will employee with no additional protections even though Maryland recognizes the “reasonable expectation” of employment” doctrine (Edenbaum v. Schwarcz-Ostreicherne, 165 Md. App. 233, 254-261, 885 A.2d 365 (2005). This can be a problem for a minority investor that expects to actively work in the business. This leaves the minority shareholder at great risk as an employee in a business should the majority owner(s) decide to terminate his/her employment, leaving the minority owner with little or no source of income. It is the intent of the SSO to enact changes in Maryland law so that minority shareholders are not considered At-will employees and must be fairly compensated via income or other means. Another problem exists for shareholders in a Chapter S corporation, since corporate profits will flow into shareholders personal income. Should the Chapter S Corporation declare profits and not elect to provide dividends or other monetary distribution, the minority shareholder may be subject to Federal and State Income Tax with no compensation from the company. It is the intent of the SSO to enact changes in Maryland law so that Chapter S corporations must pay dividends or other distribution to fairly compensate shareholders for tax liabilities. Another problem exists with legal expenses for minority shareholders that are oppressed by majority shareholder(s). In most cases, the majority shareholder(s) utilize corporate funds to pay legal expenses to oppress minority shareholders. This places a great burden on the minority shareholder to use his/her personal funds to obtain justice. It is the intent of the SSO to enact changes in Maryland law so that corporate funds must be utilized to pay for legal expenses of the oppressed minority shareholder.
Posted on: Sun, 02 Feb 2014 14:17:19 +0000
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