Shareholder Oppression Claims represent a specific area of corporate law protecting minority partners (shareholders) from unfair actions by the majority. In Georgia, where most businesses operate as small and medium-sized LLCs, "partner oppression" is a frequent issue. This occurs when controlling partners abuse their power: distributing dividends only to themselves (e.g., as salaries), withholding information from the minority, or making decisions that devalue the minority's share. In such cases, the minority feels "trapped" in their own company, unable to participate in management or sell their share at a fair price. Legal.ge offers access to corporate lawyers who will help you restore your rights, whether through claiming damages, forced buyout of shares, or involvement in company management.
What Do Shareholder Oppression Services Cover?
This service focuses on protecting minority interests and restoring corporate justice. Services include:
- Dividend Claims: Litigation against the majority for intentionally withholding profit distribution to "starve out" the minority.
- Information Requests: Obtaining financial documents and contracts through court order that the director is hiding.
- Fair Share Buyout: Demanding that the majority or the company buy out the oppressed partner's share at fair market value.
- Damages Recovery: Lawsuits for losses suffered by the partner due to the majority's bad faith decisions.
- Invalidating Decisions: Challenging meeting minutes adopted in disregard of minority interests.
Real-World Scenarios Where You Need a Lawyer
For example, you own 20% of a company. The other 80% belongs to two brothers who are also directors. They pay themselves huge salaries and bonuses, buy expensive cars on the company expense, and declare at year-end that "there is no profit" for dividends. This is classic oppression. A lawyer will appoint an audit, uncover hidden profits, and demand payment corresponding to your share or hold directors liable. Another example: the majority decided to increase capital knowing you cannot participate, diluting your 20% to 1%. A lawyer will challenge this decision as made in bad faith.
Georgian Legal Framework
Shareholder rights are protected by the "Law on Entrepreneurs." The new law (since 2022) strengthens minority rights and establishes a "duty of care and loyalty" not just for directors but also for controlling partners. This means the majority must not use their power to the detriment of the minority. General principles of good faith under the "Civil Code" are also relevant.
The Process Step-by-Step
1. Evidence Collection: Written request for information and conducting an audit. 2. Negotiation: Offering a buyout to the majority. 3. Lawsuit: Filing a claim in court to establish oppression. 4. Valuation: Determining the real value of the company and share. 5. Judgment: Court ordering compensation or forced buyout.
Why Choose a Specialist on Legal.ge?
Protecting minority rights is a tough battle because the majority holds company resources and information. On Legal.ge, you will find lawyers with strategic experience in such asymmetric disputes who know how to force the majority to respect your interests.
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