Minority Shareholders

Friday, April 11, 2014

The “Double Derivative” Conundrum: Who Has the Right to Bring a Derivative Claim Against the Officers of a Privately Held Texas Company

Sometimes what we take for granted is not so clear.  It had been axiomatic for years that only shareholders have the right to bring a derivative lawsuit in the name of the company.  Yet, the Houston Court of Appeals recently permitted a shareholder (of a parent company) to bring a derivative lawsuit on behalf of the parent’s wholly-owned subsidiary.  See Webre v. Sneed, 358 S.W.3d 322 (Tex. App.—Houston [1st Dist.] 2011, pet. granted) (No. 12-0045).  The appellate court’s decision approved what is known as a “double derivative” lawsuit in which a stockholder of a parent corporation seeks to recover for a claim that belongs to a subsidiary corporation. The Texas Supreme Court has recently granted review of this decision, which is of considerable interest because of the “double derivative” situation in which the shareholder in the parent company did not own any shares in the subsidiary.


Read more . . .


Thursday, February 13, 2014

Reboot from 2013: A Look Back at Key Cases of Note in Texas Business Divorce

Over the past year, the suspense has been steadily building in Texas in the Business Divorce arena.  Trial and appellate courts throughout the state are grappling with the claim for minority shareholder oppression and the Supreme Court is on now the verge of issuing its first significant opinion considering the shareholder oppression claim in more than fifty years.   The following are some brief take-aways from Business Divorce cases decided in Texas last year or in late 2012, which involve issues that will continue to be considered and developed in future cases:


Read more . . .


Wednesday, May 15, 2013

Dallas Court Overturns Judgment in Favor of Oppressed Minority Shareholder—Are Majority Shareholders Still Accountable for Their Oppressive Conduct?

On August 29, 2012, the Dallas Court of Appeals reversed a trial court’s decision that ordered the issuance of an $85 million dividend based on a minority shareholder’s claim of oppression. See ARGO Data Resources Corp., et al. v. Shagrithaya, No. 05-10-00690-CV, 2012 WL 3755748 (Tex. App.—Dallas, Aug. 29, 2012, no pet. h.).  A copy of the court’s opinion is available here.  The one-time dividend in ARGO Data would be split between the majority (53%) and minority (47%) shareholders. The trial court’s judgment was based on the results of a six-week trial where the jury made extensive findings that the majority shareholder had committed fraud, violated his fiduciary duties and improperly withheld dividends. The Dallas Court of Appeals nevertheless held that the minority shareholder was not oppressed primarily because the value of the company increased while the majority shareholder engaged in various improper acts, including the implementation of a secret scheme to phase out the minority shareholder from the company. Id. at *13.


Read more . . .


Wednesday, May 15, 2013

A Way Out for Minority Investors in Private Texas Companies

A favorite Willie Nelson song cautions mothers not to let their babies grow up to be cowboys. If Willie had been asked to offer guidance to mothers of investors in private Texas companies, however, he might have changed his lyrics to sing, “Mamas don’t let your babies grow up to be minority shareholders in private Texas companies without a redemption agreement.” This new version of Willie’s hit song might have been a dud on country radio, but it would have been sage advice.


Read more . . .


Archived Posts

2018
2017
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
2013

← Newer1 2 3 4Older →


With offices in Houston and Dallas, Diamond McCarthy LLP assists a variety of clients with their Texas Business Divorce matters throughout Texas, including Austin, San Antonio, Midland, Fort Worth, Galveston, Amarillo, Abilene, and Waco.



© 2021 Diamond McCarthy LLP | Disclaimer
2711 N. Haskell Avenue, Suite 3100, Dallas, TX 75204
| Phone: 214-389-5300
909 Fannin Street, 37th Floor, Houston, TX 77010
| Phone: 713-333-5100

Meet the Team | What you Need to Know | Practice Areas | About

Legal Web Development by
Zola Creative


Business Dispute News

The information provided on this site is not legal advice, and is not intended to be legal advice. You should consult an attorney for advice regarding your individual situation. The decision to hire an attorney is an important decision, and should not be based solely on advertising. We welcome your calls, letters and electronic mail, but contacting us does not create an attorney-client relationship. All attorney-client relationships that are formed with our law firm will be documented in a signed, written agreement. Please do not send any confidential information to us until an attorney-client relationship has been established.

Our prior results in other cases do not guarantee a similar outcome in a future case. The results we have obtained for our clients depend on a variety of factors that are unique to each representation and each set of facts.