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Rights of Minority Shareholders in New York: Grounds for Judicial Dissolution

What You Need To Know About Your Rights as a Minority Shareholder

Minority shareholders who own and hold between 20% to 49% of the outstanding shares of stock in a New York corporation are afforded the critical right to seek "judicial dissolution" under New York Business Corporation Law Section 1104-a (BCL 1104-a). Pursuant to BCL 1104-a the minority shareholder or shareholders who own and control at least 20% of the corporations stock may seek dissolution based on one of the following grounds:

  1. The directors or those in control of the corporation have been guilty of illegal, fraudulent or oppressive actions toward the complaining shareholders;
  2. The property or assets of the corporation are being looted, wasted, or diverted for non-corporate purposes by its directors, officers or those in control of the corporation.

For minority shareholders of small closely held businesses, the dissolution rights afforded under BCL 1104 - a represent a substantial legal right that must be evaluated when faced with a serious dispute with your partners/shareholders.

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