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What is a Shareholder Freeze-Out?

If you are part owner in a closely held company- meaning a company that is not publicly traded-you and the other owners owe one another fiduciary duties.  A fiduciary duty is the "duty of utmost good faith and honesty."

Your operating agreement or shareholder agreement likely specifies how, if at all, one owner can be required to give up their ownership.  That agreement will define the scope of the fiduciary duty in that regard.

Where it gets complicated is if you are also an employee of the company and the other owners terminate your employment without a valid reason.  In that situation, you might have a claim for a specific type of breach of fiduciary duty, known as a "freeze-out."  If the other owners cannot prove a legitimate business reason to end your employment, you may be able to recover damages for the termination.



Learn more here about shareholder freeze-outs under Massachusetts law.

Need Help With a Shareholder Freeze-Out?

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  • Home
  • About
    • Slnlaw Offices
    • Fees and Payment
    • Privacy Policy
    • Publications and Interviews
  • Attorneys
    • Emily Smith-Lee >
      • 2018 Lawyer of the Year
    • Jenna Ordway
    • Rebecca Rogers
    • Andrew Silvia
    • Elijah Bresley
  • Reviews
  • Contact
  • Blog
  • Employment Law Solutions
    • Employment Law MA
    • Discrimination in the Workplace
    • Employment Termination
    • Sexual Harassment at Work >
      • Sexual Harassment in a Small Business
      • Sexual Harassment and Non Disclosure Agreements
      • Sexual Harassment and Remote Work
    • Wage and Hour Laws
    • Independent Contractor Law
    • Non Compete Agreements >
      • Are non competes enforceable
      • Massachusetts Non Compete Act
      • Pre 2018 Massachusetts Non Competes
    • Equal Pay Act
  • Estate Planning
    • Massachusetts Wills and Trusts
    • Why You Need an Estate Plan
    • Massachusetts Estate Tax
    • Inheritance Tax
    • How to Make an Estate Plan
  • Business Law Solutions
    • Small Business Law
    • Business Contract Basics
    • Civil Suit Defense
    • Legal Issues for Start Ups
    • Trademark Basics
    • How to Incorporate
    • Sale of Business
  • Legal FAQs
    • Estate Planning FAQs
    • Probate FAQs
    • Small Business FAQs
    • Wage Act FAQs
    • Commission Pay FAQs
    • Overtime FAQs
    • Independent Contractor FAQs
    • Non Compete FAQs
    • Employment Discrimination FAQs
    • Employment Termination FAQs
    • Severance Package FAQs
    • Medical Leave FAQs
    • Sexual Harassment FAQs
    • Massachusettts Unemployment FAQs
    • Employer FAQs
    • Civil Lawsuit FAQs