Abstract

This Note begins by explaining actions for shareholder oppression generally. Part II defines oppression, introduces involuntary dissolution statutes, and describes the most common alternative remedy to dissolution available to a court, a judicially ordered buyout. Part HI discusses how courts go about valuing closely held corporations in buyout situations, focusing specifically on the concept of "fair value" and the applicability of various discounts. Part IV examines the jurisprudence surrounding the application of lack of marketability discounts in dissenters' rights litigation. The decisions in this area are relevant because they inform how courts treat such discounts in oppression actions. Part V of the Note tackles various state court decisions related to the application of lack of marketability discounts in judicially ordered buyouts pursuant to oppression actions. This section traces the historical progression of courts' decisions in this area and concludes by examining two recent cases, Balsamides v. Protameen Chemicals, Inc. and Advanced Communication Design, Inc. v. Follett, which most accurately reflect the current policy regarding application of lack of marketability discounts. Part VI critiques the discretionary approaches taken by the New Jersey and Minnesota courts, outlining their potential shortcomings. The Note concludes by exposing the inappropriateness of allowing discretion in the application of discounts and explaining why a bright-line rule disallowing the application of lack of marketability discounts in all cases would be superior to the current approaches.

How to Cite