Shareholder Oppression

The Texas Supreme Court recently decided that Texas does not recognize a common-law cause of action for “shareholder oppression.”  Richie v. Rupe, 443 S.W.3d 856, 891 (Tex. 2014).  The Court reasoned that since the Texas Legislature has crafted a statutory scheme governing domestic corporations in the Texas Business and Organization Code there are no compelling grounds to impose a cause of action upon the statutory framework.  Id.

The Texas Business and Organization Code provides that the only remedy for shareholder oppression is the appointment of a rehabilitative receiver.  Richie v. Rupe, 443 S.W.3d at 877; see also Tex. Bus. Orgs. Code § 11.404.  This remedy for “oppressive” actions is limited yet sufficient according to the Texas Supreme Court.  Richie, 443 S.W.3d at 891.