Opinion ID: 888269
Heading Depth: 1
Heading Rank: 6

Heading: Lack of Access to Share Value

Text: ¶ 27 Brian argues that the value of his investment is tied up in the Corporation and therefore he has been completely divested of his assets as a shareholder.... Brian fails to point to any dishonest or wrongful conduct by the Corporation, Fox, 198 Mont. at 209, 645 P.2d at 933, but provides the following general reasons why the value of his shares are locked in and he has thus been oppressed: his inability to sell his shares or to receive any current benefit from them because they are not marketable, the Corporation's policy of not paying dividends, and the Corporation's failure to repurchase his shares. Brian further argues that the District Court erred by failing to consider his separate rights as a shareholder in addition to his rights as an employee. ¶ 28 However, Brian has not demonstrated how the oppressions about which he complains are different than those borne by other shareholders of the Corporation. The fact that his shares are not marketable is typical of closely held corporations generally and is likewise true of Whitehorn Farms. The articles of incorporation contain no provision providing a right to have shares purchased by the corporation or other shareholders. Brian complains that the Corporation pays no dividends, but he is well aware from his long involvement with the Corporation that it has historically not paid dividends. While failing to issue dividends to shareholders could be an oppressive tactic, the mere non-issuance of dividends is not oppressive in all circumstances. Here, the District Court concluded that neither Brian nor Earl had any capital investmenthaving received their shares as giftswhich would lead to an expectation of profits, and that [o]nly their employment by the farm caused them to receive the full benefits as employees and officers, just the same as they saw received by their father and uncle. Brian does not directly challenge the District Court's conclusion that the termination of his employment was justified and thus, without other evidence of oppressive intent, the Corporation's failure to pay dividends is insufficient to establish oppression. Lastly, Brian complains that the Corporation has not repurchased his shares. The articles of incorporation do not mandate such a purchase, and Brian fails to point to any authority that requires a corporation to repurchase the shares of a shareholder merely because the shareholder wants out of the corporation. Thus, in every regard, Brian appears to be in the same position as all the other shareholders. Only those employees and officers who contribute to the operation of the Corporation accrue additional benefits, and Brian does not contest his loss of those positions. Brian's significant stock interest in the Corporation does have value, and he may yet sell his interest to other shareholders or to the Corporation. However, given the lack of evidence of oppressive intent, there is no reason he is entitled to an order forcing the Corporation to repurchase his shares. ¶ 29 Brian also asserts there has been an effective severance of Brian's rights as a shareholder and that the District Court failed to consider his separate rights as a shareholder. However, although the District Court, reflecting the emphasis of Brian's case before it, did not analyze this issue in depth, it did consider the claim, noting that [Brian] cannot complain to this court or anyone else about his current situation as a shareholder who is receiving nothing from his shares. The Court did not receive any evidence that Brian was being squeezed out of participation as a shareholder. Brian did not present evidence of any inhibition upon the exercise of his shareholder rights, and on appeal he has not challenged the District Court's finding of fact that, at a shareholder meeting after Brian had been terminated as an employee, he was advised that he could cumulate his votes and nominate and attempt to elect himself to the board of directors. [1] Indeed, while Brian chose not to nominate himself, he participated as a shareholder by nominating and moving to re-elect the current directors.