Glossary: Majority Shareholder

Majority Shareholder

Majority Shareholder - A Majority Shareholder is a shareholder who controls over 50% of your corporation's issued and outstanding stock. A majority shareholder cannot act to advance transactions with the corporation that are in his own best interests over the best interests of the corporation, or in some instances of the minority shareholders. To do so, could invite a shareholder's direct or derivative suit alleging an abuse of corporate position. The business judgment rule is not available as a defense to a controlling shareholder, especially one who is also a director or officer, with respect to a corporate transaction in which that officer, director, or controlling shareholder has a conflict of interest. The controlling shareholder having the conflict of interest has the burden of proving the transaction's fairness to the corporation.

Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.

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