Also known as: majority shareholders · controlling shareholder
Written by attorneys · grounded in primary & secondary sources — see below
A shareholder possessing ownership or control of more than fifty percent of a corporation's outstanding shares. This position confers the ability to elect directors and direct corporate policy.
Madison Meyers as majority shareholder of Solis Widgets Inc. formed the entity with minimal capital and no stock certificates or records. She transferred equipment and cash without documentation to her other ventures, leaving the corporation insolvent when a supplier sued. The court applied the two-prong test and disregarded the corporate form to reach her personal assets.
Michelle Murphy as majority shareholder of UOP caused a cash-out merger at $21 per share after internal studies showed higher value. Minority holders sued claiming the price was unfair. The court required the majority to prove entire fairness in the transaction.
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Miles Montgomery as majority shareholder of Santa Fe Industries effected a short-form merger and paid minority holders a set price. The minority alleged the price was too low and sued under federal securities law. The Supreme Court held that mere unfairness without deception did not state a claim.
Mohan Malhotra as majority shareholder learned material nonpublic information while working on a takeover and purchased shares without disclosing the information. He was convicted of securities fraud. The Supreme Court reversed because he owed no duty to the sellers he traded with.
Maurice Marshall as majority shareholder of Atlas Corp. expanded the board from seven to fifteen members to prevent a dissident group from gaining control. The court enjoined the action because it was taken for the primary purpose of impeding shareholder voting rights.
Mariam Mansour as majority shareholder of First American Bank caused a merger and issued a proxy statement describing the transaction as fair. Minority holders sued claiming the statement was misleading. The Supreme Court held that opinions of fairness can be actionable if they omit material facts.
Entire fairness review applies. The majority must prove both fair dealing and fair price when the transaction benefits the controller at the expense of minority shareholders.
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A court may pierce when the corporation was the alter ego of the shareholder and respecting the form would sanction fraud or promote injustice. Undercapitalization, failure to observe formalities, and siphoning of assets are key factors.
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Yes. A controlling shareholder stands as a fiduciary to the corporation and minority shareholders and may not use control to obtain special advantages or prejudice the minority.
…greatly oversubscribed by UOP shareholders at $21 per share. In addition Signal was confronted with an image problem in that, as controlling shareholder of UOP, it was required under accounting procedures to take into account 100 per cent of UOP's debts and sales, but by the same token it could take only 50.5 per cent of UOP's earnings.…