How does the law protect minority shareholders?

In South Carolina, minority shareholders are protected by law from potential abuse from majority shareholders. Minority shareholders have some powerful tools that help them protect their shares. Firstly, minority shareholders can file a derivative action suit if they believe that a company’s actions jeopardize their investments. With this suit, minority shareholders can sue the board of directors for wrongfully allowing the majority shareholders to take advantage of them. In addition, South Carolina law also allows minority shareholders to bring a “squeeze-out” lawsuit. This is when the majority shareholders look to gain total control of a company by buying shares from minority shareholders at an undervalued price. If the suit is successful, the minority shareholders may be compensated for their losses. Thirdly, South Carolina encourages shareholders to take part in shareholder meetings. Here, shareholders can express their views and contest any decisions they feel are detrimental to their investments. This gives them the opportunity to be involved in the decision-making process. Finally, South Carolina requires companies to give minority shareholders a fair shake when it comes to compensating and distributing earnings and revenue. This means that minority shareholders should receive the same benefits that majority shareholders do. Overall, South Carolina law works hard to protect minority shareholders from exploitation. With powerful tools and laws protecting them, minority shareholders can rest assured that their investments are safe and their voices are heard.

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How does the law protect minority shareholders?

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