Court Opinion

ID: 7877090
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:16:18.462696+00
Date Added: 2024-06-11T13:51:12.382765
License: Public Domain

I respectfully dissent. The unique facts of this case reflect a situation in which the dissenting shareholder rights under Minn.Stat. § 302A.471 are most applicable. Appellant Hossfeld company is a closely held corporation. Respondent owned 36% of the outstanding shares while Ralph Hossfeld, the company president, and his wife owned 51% of the shares. The amendment of the articles and bylaws to remove the veto power essentially left the Hossfelds in control of the corporation. The trial judge correctly recognized in its order that "the facts presented provide the classic example meant to be rectified when the legislature passed the subject statute."
Minn.Stat. § 302A.471, subd. 1(a)(1) (1988) allows a shareholder to obtain payment for the full value of his shares when the corporate articles are amended in such a way as to materially and adversely affect the rights or preferences of the shareholder in that it alters or abolishes a preferential right of the shares. The comments to this statute explain:
 The right of a dissenter to obtain payment for his shares is extended to embrace impairment of share rights by amendment for reasons similar to those which justify the grant of dissenters' rights in cases of merger, consolidation and transfer of assets. The grant of these rights increases the security of investors by allowing them to escape when the nature of their investment rights is fundamentally altered. The grant also enhances the freedom of the majority to make changes, because the existence of an escape hatch makes fair and reasonable a change which might be unfair if it forced a fundamental mutation of rights upon unwilling investors without giving them a reasonable alternative.
Minn.Stat.Ann. § 302A.471 Reporter's Notes — 1981. Respondent invested in the stock when he had the ability to veto appointments *Page 541 
of directors, officers and managers. The amendment of the articles and bylaws, rather than the statutory amendments, fundamentally altered the stockholder's rights. Therefore, I would affirm the trial court.