Abusive Use of Buy-Sell Agreements
While shareholder agreements—in particular, Buy-Sell provisions—may provide some protection for minority shareholders against shareholder oppression, ordinarily they are not. More often, the Buy-Sell provision becomes the means of oppression. Normally, the buy-sell provides the option to purchase a shareholder’s shares upon termination of at-will employment at at book value or some other low price. In such a situation, the majority may file a minority shareholder for no reason other than to use the Buy-Sell to obtain the minority’s shares at an unfairly low price. The minority shareholder would be stuck with the (in retrospect) very unfair bargain set forth in the buy-sell. In this situation would the minority shareholder have any remedy? Perhaps.