Minority shareholders in Mississippi businesses often lack control over major decisions. When majority shareholders abuse their power, it can harm the business and the rights of the minority shareholders.
Mississippi law offers several options to help minority shareholders protect their rights and hold others accountable.
Watch for signs of abuse
Overreaching by majority shareholders can take several forms. It may include denying access to records, excluding others from profits or approving decisions that only benefit themselves. Some may even mismanage the company or misuse business assets for personal gain. Mississippi law protects minority shareholders from this type of unfair treatment, especially when it damages the business or violates the shareholder agreement.
Use the right to inspect records
Mississippi shareholders have the right to inspect company records. This includes financial statements, meeting minutes and other important documents. If majority shareholders refuse to share this information, it could signal wrongdoing. Reviewing records can help uncover hidden problems and show whether other shareholders have acted improperly.
File a derivative lawsuit
A minority shareholder can take legal action to protect the company through a derivative lawsuit. This type of lawsuit allows a shareholder to sue on behalf of the company when those in control refuse to act. For example, if a majority shareholder takes company money for personal use, a derivative suit can help recover those funds. Mississippi courts allow these cases if the shareholder shows that internal complaints have failed and that the business suffered harm.
Demand accountability and fair treatment
Mississippi courts may step in to prevent unfair practices. They can order majority shareholders to repay misused funds and follow the established bylaws. In serious cases, courts may even dissolve the business to protect the rights of minority shareholders.
Minority shareholders in Mississippi should stay informed and involved. It is important to regularly review business records, attend meetings, and ask questions when something seems off. Shareholders who act quickly can often stop small issues before they become serious problems.
