The Oklahoma Bar Journal January 2023

the standards of fair dealing, and a violation of fair play on which every shareholder who entrusts his money to a company is enti tled to rely.” 4 Other courts have expanded that definition to also include conduct that substantially defeats the minority shareholder’s reasonable expectations. 5 These definitions leave the court with the task of subjectively determining whether sharehold ers’ actions are oppressive. Terms such as “burdensome,” “harsh,” “wrongful” and “fair” in these definitions all lend themselves to any number of subjective inter pretations and applications. What could be “wrongful” to one court may be completely tolerable to another. Courts appear reluctant to suggest a list of elements or even a “bright line” test for determin ing the presence of such behavior,

treatment before it happens? What can lawyers do to ensure their cli ents’ interests are protected in such situations? These questions are further examined in this article.

substantial raises. The aggre gate increase in their salaries is equal to the salary formerly paid to Jon. They comply with all of Jon’s requests for inspec tion of the books and records of the corporation; however, they refuse his demands for declaration of dividends, saying the company needs to retain earnings for future capital needs. They also decline Jon’s request that either they or the company purchase his stock. Jon attempts to find other buy ers for his one-third interest but can find no one interested in purchasing a minority interest in a closely held corporation. 2 What protections or remedies are available for Jon, who was a victim of the classic freeze-out? Is it possible to protect Jon from such

DEFINING OPPRESSIVE CONDUCT

States have defined “oppres sion” in different ways, but it generally includes a violation of the standards of fair dealing and fair play, a violation of a fiduciary duty owed to the minority share holder or conduct that results in frustration of the minority shareholder’s reasonable expecta tions. 3 For example, the Colorado courts have defined oppression as “burdensome, harsh and wrongful conduct; a lack of probity and fair dealing in the affairs of the com pany to the prejudice of some of its members; or a … departure from

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THE OKLAHOMA BAR JOURNAL