Shareholder oppression—also known as minority shareholder oppression, squeeze out, or freeze out—is a general term for a claim or cause of action that may be made by a minority shareholder—a shareholder who owns less than a controlling percentage of the company—and is based on the alleged unfair or oppressive treatment of the minority shareholder.

Minority shareholder oppression claims often arise in closely-held corporations—corporations that are not publicly traded; in which a relatively small number of people own most or all of the shares; and in which the shareholders are often family members or people who know each other.

Those in control of a closely held corporation may use various squeeze-out or freeze-out tactics to deprive minority shareholders of benefits; to misappropriate those benefits for themselves; or to induce minority shareholders to relinquish their ownership for less than it is otherwise worth.

The types of conduct most commonly associated with such tactics include:

• denial of access to corporate books and records;

• withholding payment of, or declining to declare, dividends;

• termination of a minority shareholder's employment;

• misapplication of corporate funds and diversion of corporate opportunities for personal purposes; and

• manipulation of stock values.

In Pennsylvania, shareholder oppression refers to actions by those in control of a closely-held corporation that unfairly prejudice the interests of minority shareholders. Pennsylvania law provides remedies for minority shareholders who are subjected to oppressive conduct. The Pennsylvania Business Corporation Law (BCL) does not explicitly define 'shareholder oppression,' but courts have interpreted the law to protect minority shareholders. Remedies may include forcing the majority shareholders to buy out the minority's shares at a fair value, awarding damages, or in some cases, ordering corporate dissolution. The types of conduct that may constitute oppression include denying access to corporate records, withholding dividends, terminating employment, misusing corporate funds, and manipulating stock values. Minority shareholders in Pennsylvania who believe they are experiencing oppression should consult with an attorney to explore their legal options and to ensure their rights are protected.