Minnesota Freeze-Out Actions: Understanding Business Partnership Disputes
Last updated on March 19, 2025
Disagreements among shareholders and partners can be highly stressful and disruptive to business operations. When leadership is entrenched in disputes, it can affect the entire organization. If you suspect you are the target of freeze-out activity, legal guidance can be critical to preserving your rights as a shareholder.
Attorney Mark K. Thompson, the founding attorney of MKT Law. He has been practicing law for over 25 years. Based in Minneapolis, his firm provides dedicated litigation support to businesses and executives in the greater Twin Cities metro area. If you are caught up in a shareholder dispute and worried about freeze-out activities, he can provide invaluable legal support and guidance.
What Are Some Common Freeze-Out Tactics In Minnesota?
A freeze-out action occurs when majority shareholders or partners intentionally exclude or marginalize a minority stakeholder. This can happen through various means, such as denying access to financial information, excluding the stakeholder from decision-making processes or limiting their ability to sell shares. The goal is often to force the minority stakeholder to sell their interest under unfavorable conditions. Common freeze-out tactics in Minnesota include:
- Exclusion from meetings: Minority stakeholders might be deliberately excluded from important meetings and decision-making processes, leaving them out of the loop on crucial business developments.
- Withholding information: Majority shareholders might deny access to financial records and other vital information, making it difficult for the minority stakeholder to make informed decisions about their investments.
- Reduction of dividends: By reducing or eliminating dividends, the majority can pressure the minority stakeholder financially, hoping they will sell their shares at a lower price.
- Unfavorable employment changes: If the minority stakeholder is also an employee, they might face demotions or changes in job responsibilities to undermine their position within the company.
If you suspect you are experiencing a freeze-out, an experienced business litigator can help you evaluate and recognize the tactics and take the necessary steps to protect your rights and interests in the business.
What Is The Difference Between A Freeze-Out And A Force-Out In Minnesota?
While both freeze-out and force-out actions aim to remove a stakeholder, they differ in their methods. A freeze-out typically involves isolating the minority stakeholder and making their position untenable, often without direct removal. In contrast, a force-out actively seeks to remove the stakeholder from their position or ownership, sometimes through legal or contractual means.
Attorney Thompson has handled many different types of shareholder disputes and business partner disagreements in his 20 years of private practice. He can provide seasoned guidance regarding corporate expulsion, an accurate assessment and a fair market evaluation of a company’s value, and assist with shareholder agreements and corporate dissolution.
Consult A Minneapolis Business Litigation Attorney
If you are involved in a business partnership dispute and need legal guidance, contact MKT Law, today to consult a seasoned business litigator. To inquire about availability or to schedule an initial consultation, call 612-217-2913 or send a message through the firm’s online form.