Do shareholders of closely held corporations have any legal responsibilities to each other?
Corporate law imposes a fiduciary duty on business directors that requires them to act in the best interests of the company’s shareholders. For closely held corporations where shareholders work together and may act as directors, there may be a fiduciary responsibility between shareholders in some instances. The traditional legal view holds that shareholders have no special responsibilities to one another. In closely held businesses, however, majority shareholders can potentially greatly damage the interests of small shareholders. Since most investors do not want to buy closely held shares, minority shareholders have few options when their interests are compromised. In response, some states and courts have recognized fiduciary duties among shareholders of closely held businesses. These duties depend on the state and the particular circumstances of the case. Some state court holdings require that majority shareholders exercise the utmost good faith and loyalty to minority shareholders of
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