Ownership, Member and Shareholder disputes are not limited to large corporations. They may occur at any time in any type of business entity. Disputes may range from breaches of fiduciary duty and loyalty to dilution of ownership interests and valuation issues.

According to the Small Business Administration (SBA), small businesses make up more than 99.7% of all employers. Moreover, they create more than 50 percent of the non-farm private gross domestic product (GDP). In fact, small businesses are located in virtually every state, city and neighborhood that you can find. Home-based businesses alone account for 53 percent of all small businesses.

One of the most important issues presented to a new business is their choice of a business entity. These choices include sole proprietorships, partnerships, limited liability companies and corporations. In most instances, business owners wisely choose the corporate form that limits their personal liability and allows them to save money in a variety of ways including taxes.

Many of these corporations are small, privately held companies. These are also known as "close" corporations or "Subchapter S corporations." Unlike large corporations, such as 3M or General Mills, the ownership or stock of closely held corporations is not publicly traded. Instead, the stock ownership is maintained in the hands of a small number of people. These are often family members or friends who started the business together.

The make up of these small businesses also means that the stock owners have quite different expectations than those held by shareholders in publicly traded corporations. For example, shareholders of Microsoft stock have invested in that stock primarily as an investment. Since it is publicly traded they may very easily sell their stock and the going rate on the stock market on any given day. If such freedom to sell stock in closely held corporations were allowed, family member could find themselves sharing ownership and working side by side with strangers or new owners with a very different view of how the business should be run. This is a breeding ground for conflict.

For that reasons, a minority interest in a close corporation is effectively worthless unless the minority shareholder is employed by or allowed to share in the profits of the corporation, or some mechanism exists that allows the minority shareholder to exit the corporation and receive fair value for his interest in the corporation.

It is not difficult to imagine how a majority shareholder in a close corporation, or a combination of shareholders forming a majority, can unfairly take advantage of their majority position to the detriment of the minority. While the possibilities are endless, classic examples of majority "oppression" include firing minority shareholders without paying any value for their shares, unreasonably raising the majority shareholder's salary, and refusing to pay dividends in bad faith.

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