The certified letter arrives on a Tuesday, and it is written to sound like a verdict. Your minority shareholder, the one who stopped coming to work two years ago but never stopped cashing distributions, now says you have frozen him out. His lawyer accuses you of oppression, breach of fiduciary duty, and self-dealing, and demands that the company buy back his quarter of the business at a price his accountant built by taking last year’s best month, annualizing it, and ignoring every liability on the books. The letter closes with a deadline and a threat to ask a judge to dissolve the company you spent three decades building. The number at the bottom reads less like a settlement than a ransom.
The valuation a departing owner demands on the first day is almost always the number that fits the case he wishes he had. It is not the case Illinois law gives him. Shareholder oppression is a real claim with real remedies, but the statute that creates it and the decades of Illinois decisions interpreting it leave the majority far more room than the demand letter admits. The owners who come through these fights with the company intact are the ones who learn early how much of the claim is leverage and how much is law.
Illinois gives a minority owner of a closely held corporation a menu of remedies under section 12.56 of the Business Corporation Act, 805 ILCS 5/12.56, when those in control act in a manner that is illegal, oppressive, or fraudulent. The Illinois Limited Liability Company Act, 805 ILCS 180/35-1, gives a comparable remedy to an oppressed member. Dissolution sits at the bottom of that menu, as a last resort. The remedy that usually controls is a buyout of the complaining owner’s interest at its fair value, and that single phrase, “fair value,” is where most of these cases are actually decided.