Does Texas recognize a cause of action for shareholder oppression?
Texas does recognize a cause of action for shareholder oppression similar to other states that provide this right, which generally involves rights to force a buyout upon the finding that minority shareholders happen treated oppressively. In general, Texas law for finding oppressive conduct is more stringent and the rights provided by Texas law in the presence of oppressive conduct are limited and do not contemplate a buyout right.
What causes of actions are commonly asserted and minority shareholder litigation in Texas?
In Texas, minority shareholders typically assert a wide array of causes of action against companies or, as derivative claimants, against controlling shareholders in their capacity as directors or officers. these often include claims for breach of fiduciary duty, breach of contract, suits for an accounting, fraud and constructive fraud, conspiracy, unjust enrichment, fraudulent transfer, and conversion, among others.
Is there a right to seek dissolution of a corporation in Texas?
Only in the very limited circumstances established by under section 11.402 of the Texas Business Organizations Code as interpreted by the Texas Supreme Court in Ritchie v. Rupe, 443 S.W.3d 856, 879 (Tex. 2014)..Generally, this does not provide a realistic means of withdrawing the value of one’s investment from a closely held company.
What statutes of limitation apply to causes of actions commonly asserted and minority shareholder litigation in Texas?
The general statute of limitations in Texas applicable to tort claims is 2 years. Breach of contract and fiduciary duty claims are limited by a four-year statute. However, it is important to remember that the “discovery rule” or the “fraudulent concealment” doctrine may apply to lengthen the period of time after a legal injury in which a claimant may finally cause of action. At any time, consistent with the Texas Business Organizations Code, shareholders have a right to request books and records.
Do minority shareholders have informational rights under Texas corporate statutes? If so, what are they?
In general, the various statutes governing Texas entities provide rights to access books and records of filing entities. In connection with corporations, Section 21.218 of the Texas Business Organizations Code furnishes to all shareholders who have held their shares for more than six months or who hold at least fie percent of a corporation’s outstanding shares are entitled to examine and copy, at a reasonable time, the corporation’s books, records of account, minutes, and share transfer records relating to the stated purpose. The statutes provides that this examination may be conducted in person or through an agent, accountant, or attorney. Further, shareholders are entitled to annual statements that reasonably detail the corporation’s assets and the results of its operations. Additionally, corporations are required to hold shareholder meetings and provide shareholders with notice of their meetings consistent with the relevant statutes and bylaws.
