Involuntary Dissolution of a California Corporation: The Nuclear Option for Mistreatment of Minority Shareholders

Unlike a partner in a partnership, a minority shareholder has no right to dissolve a corporation merely by withdrawing her interest. Absent judicial intervention, corporate dissolution occurs only at the consent of all shareholders. Although a disgruntled shareholder in a public corporation can always withdraw her investment by selling her shares in the market, such an exit strategy is rarely available to a minority shareholder in a private company. Nonetheless, oppressed minority shareholders are not without a remedy in California. Subsecs. (b)(4) and (b)(5) of Corporations Code section 1800, which is California’s involuntary dissolution statute, offer protection to minority shareholders in certain situations from the prejudicial acts of those in control.