The Oklahoma Bar Journal January 2023

circumstances: 1) where there is bad faith, 2) where there is a failure to disclose an enhancement in stock value or 3) where there is a misuse of power to promote personal interests at the expense of the corporation. 27 In making such determination, the court stated, “A court of equity will not enforce stock transfer restrictions adopted under circumstances which indi cate bad faith and inequitable treat ment of stock purchasers. … [Further], a majority shareholder has a fiduciary duty not to mis use his power by promoting his personal interests at the expense of the corporation, and the majority shareholder has the duty to protect the interests of the minority.” 28 The court makes it clear that Oklahoma seeks to protect minority shareholders from oppression. However, it is less clear if that protection extends to a judi cial remedy for such oppression. Other points of Oklahoma law seem to suggest that no such judicial remedy will be enacted in Oklahoma. For instance, minority shareholders of farming and ranch ing corporations may petition the court for dissolution of the corpo ration “for good cause shown” if

any “corporate act or transaction that has the effect of involuntarily eliminating the eligible holder’s equity interest” or an amendment of the charter documents whose effect is to exclude or limit the voting rights of shares. 24 Oklahoma courts could use this provision for authority to provide a judicial rem edy in freeze-out situations should the Legislature continue to decline to do so. However, in as much as the above principles are not spe cifically codified in Oklahoma statutory law, Oklahoma’s juris prudence may veer away from the corporate laws of Delaware and perhaps accept a judicial remedy for minority shareholders experi encing a freeze-out. 25 Another indication that Oklahoma may choose to imple ment a judicial remedy for minority shareholders stems from reasoning similar to that in Renberg v. Zarrow . 26 Although this decision does not discuss a freeze-out situation, it does provide insight into the Oklahoma Supreme Court’s stance on minority shareholder rights. In Renberg , the court determined that mandatory buy-sell provi sions in a stock agreement may be unenforceable under the following

relief against oppression? Previous Oklahoma decisions may provide a clue as to how Oklahoma will decide this issue. In general, Oklahoma’s corpo rate law is derived from the corpo rate law of Delaware. 22 Therefore, it seems Oklahoma would likely follow Delaware’s law on the issue. Much like Delaware, Oklahoma does not have a statutory provision to petition for dissolution in cases of oppression. However, unlike Delaware, Oklahoma elected to exclude the statutory close corpo ration chapter of corporate law. The Delaware case law denying a judicial remedy for oppression specifically relied upon the fact that statutory schemes for close corporations already existed and preempted the field on this issue. Thus, if Oklahoma were to follow Delaware’s lead, it would have to rely on separate reasoning. One potential resource upon which Oklahoma could rely would be the American Law Institute’s Principles of Corporate Governance, which seems to provide a remedy for a freeze-out of minority share holders. 23 Section 7.21 states that a shareholder is entitled to a fair value of their shares in the event of

Since Oklahoma has not dealt with the issue of shareholder oppression, at least within its body of reported case law, minority shareholders are provided essentially no protection or remedy for oppression outside of contractual schemes.

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THE OKLAHOMA BAR JOURNAL