Duties of Majority Shareholders. Atlas Food Systems & Services, Inc, based in South Carolina, ...

Duties of majority shareholders
The court found that Alex had engaged in fraud and Atlas had engaged in conduct that was fraudulent, oppressive, and unfairly prejudicial toward John. Among other relief, a buy-out was ordered. On appeal, a state intermediate appellate affirmed this result. On further appeal, the South Carolina Supreme Court upheld this decision, finding that this case presents a classic example of a majority freeze-out,' and that    Atlas had engaged in conduct which was fraudulent, oppressive and unfairly prejudicial. The court remanded the case for a determination of the value of the shares, and any other damages. The court explained that a minority shareholder in a close corporation faces a potential danger the shareholder of a public corporation generally avoidsthe possibility of harm to the fair value of the shareholder's investment. At its extreme, this harm manifests itself as the classic freeze out where the minority shareholder faces a trapped investment and an indefinite exclusion from participation in business returns.    Common freeze out techniques include the termination of a minority shareholder's employment    and the removal of a minority shareholder    In a public corporation, the minority shareholder can escape such abuses by selling his shares; there is no such market, however, for the stock of a close corporation.