South Carolina Shareholder Oppression Litigation

In closely held corporations and LLCs, the concentration of control creates inherent tension between majority power and minority vulnerability. When that tension erupts into litigation—whether you’re a minority shareholder or LLC member whose investment has been devalued or a controlling owner facing claims that threaten business continuity—the stakes are substantial. I represent both minority owners asserting oppression claims and majority owners defending against them in disputes involving South Carolina corporations and limited liability companies.

South Carolina’s Oppression Framework: Corporations and LLCs

South Carolina law provides remedies for oppressive conduct in both corporate and LLC contexts, though the statutory frameworks differ:

For Corporations: S.C. Code Ann. § 33-14-300 permits judicial dissolution or equitable relief where those in control “have acted, are acting, or will act in a manner that is illegal, fraudulent, oppressive, or unfairly prejudicial” to the corporation or shareholders. For statutory close corporations under S.C. Code Ann. § 33-18-400, additional remedies including court-ordered buyouts are expressly available.

For LLCs: South Carolina courts have extended oppression principles to limited liability companies through equitable powers. In Wilson v. Gandis, 430 S.C. 282, 844 S.E.2d 631 (2020), the South Carolina Supreme Court affirmed that minority LLC members may pursue oppression claims and obtain forced buyouts where majority members engage in unconscionable and oppressive conduct. The Court held that a minority LLC member’s action for oppression is an action in equity, applying similar standards as corporate oppression cases.

The Landmark Wilson v. Gandis Decision

In Wilson v. Gandis, a case I litigated representing the minority member, the South Carolina Supreme Court addressed LLC oppression for the first time in a reported decision. The trial court characterized the conduct as a “classic squeeze-out,” finding that emails between the majority members “abounds with evidence of calculated oppression” and “could serve as a script” for minority member oppression.

The oppressive acts included: withholding guaranteed distributions while diverting funds to majority owners, monitoring the minority member’s private emails, limiting access to financial information, terminating healthcare benefits, surreptitiously forming competing businesses, funneling money through inflated related-party transactions, and attempting to physically remove the minority member from his office using a police officer.

Critically, the Supreme Court held that LLC members who engage in “calculated oppression” are not protected by the LLC’s liability shield under S.C. Code Ann. § 33-44-303(c). While LLC members normally enjoy protection from personal liability for actions in the ordinary course of business, oppressive conduct falls outside this protection. The Court ordered the LLC to purchase the minority member’s interest in the first instance, with majority members secondarily liable in proportion to their ownership if the LLC failed to comply.

South Carolina’s Conduct-Focused Standard

The South Carolina Supreme Court in Kiriakides v. Atlas Food Systems & Services, Inc., 343 S.C. 411, 540 S.E.2d 257 (2001), rejected the “reasonable expectations” test used in many jurisdictions. South Carolina law focuses on the majority’s conduct—whether actions are illegal, fraudulent, oppressive, or unfairly prejudicial—rather than whether minority owners’ subjective expectations were frustrated.

This standard shapes both offensive and defensive strategies, requiring concrete proof of wrongful conduct rather than disappointment with business outcomes. Courts will not microscopically examine family relationships, unstated assumptions, or retroactively impose obligations based on what minority owners hoped would occur but failed to secure contractually.

Freeze-Outs, Squeeze-Outs, and Dilution

Allegations of systematic schemes to eliminate minority interests require proof of coordinated conduct, not merely business decisions with incidental impact. Share dilution, forced buyouts at depressed valuations, asset stripping, or formation of competing entities (as in Wilson v. Gandis) can constitute oppression when executed to benefit controlling interests at minority expense.

For minority owners: Establish deliberate patterns—timing of decisions, communications revealing intent (the “script for oppression” emails in Wilson v. Gandis), financial engineering designed to depress value, or refusal of fair buyout opportunities. Demonstrate how challenged conduct deviates from legitimate business rationale and serves primarily to eliminate minority interests. Valuation evidence showing depression of ownership value below fair market standards provides critical support. In LLCs, challenge formation of competing entities or diversion of business opportunities.

For majority owners: Demonstrate business decisions were independent responses to market conditions, competitive pressures, or operational needs—not coordinated freeze-out schemes. Where buyout offers were made, establish terms reflected fair value based on credible appraisals and provided reasonable exit opportunities. Prove equal impact on all owners or legitimate differentiation based on contributions and involvement. Establish that any competing business or opportunity diversion was permissible under governing documents.

The Business Judgment Rule and Fiduciary Duty Analysis

The business judgment rule provides presumptive validity to decisions made in good faith and in the entity’s interest. However, this protection has limits—particularly where self-dealing, conflicts of interest, or bad-faith conduct to harm minority owners is alleged.

Corporate Context: Directors owe fiduciary duties to the corporation. While South Carolina courts have not recognized formal fiduciary duties running directly from majority shareholders to minorities in ordinary circumstances, controlling shareholders may owe informal fiduciary duties where special relationships of trust exist—family enterprises, long-standing partnerships, or documented reliance relationships.

LLC Context: In South Carolina LLCs, members and managers owe fiduciary duties as specified in the operating agreement or, absent such provisions, as established by common law. The LLC Act permits contractual modification of fiduciary duties, making operating agreement analysis critical.

For minority owners: Challenge business judgment rule protection by establishing self-dealing, demonstrating decisions benefit controlling owners personally rather than corporately, or proving bad-faith intent to harm minority interests. Present evidence of conflicts of interest disabling business judgment deference. In LLCs, identify fiduciary duties under operating agreements or common law that were breached. The Wilson v. Gandis Court affirmed breach of fiduciary duty findings against majority members.

For majority owners: Establish legitimate business purpose for challenged decisions, demonstrate compliance with disinterested director or manager approval processes, and present expert testimony supporting reasonableness of business strategies. Where informal fiduciary duties are alleged, require specific proof of trust relationships beyond mere co-ownership. Maintain that decisions advanced entity interests rather than personal interests. In LLCs, invoke operating agreement provisions limiting or defining fiduciary duties.

Remedies: Dissolution, Buyouts, and Equitable Relief

South Carolina courts possess broad equitable powers to fashion appropriate relief in both corporate and LLC oppression cases.

Available Remedies

Judicial Dissolution: The most extreme remedy, typically reserved for deadlock, irreparable harm, or impossibility of fair resolution. Available under § 33-14-300 for corporations and through equitable powers for LLCs.

Court-Ordered Buyouts: Expressly authorized for statutory close corporations under § 33-18-400. For regular corporations and LLCs, courts may order buyouts through equitable powers, as affirmed in Wilson v. Gandis for LLCs.

Lesser Equitable Relief: Courts may order specific governance changes, accounting, information access, or operational modifications addressing grievances without destroying the enterprise.

Valuation Considerations in Buyout Cases

Where buyouts are ordered or negotiated, valuation methodology becomes central. Key issues include:

Minority Discounts: Whether non-controlling interests should be discounted for lack of control
Marketability Discounts: Whether illiquidity of closely held ownership reduces value
Oppression Impact: Whether valuation should reflect harm caused by oppressive conduct or fair value absent oppression
Valuation Date: Whether interests should be valued at petition date, judgment date, or other points in time
Methodology: Income approach, market approach, or asset-based valuation for closely held enterprises

In Wilson v. Gandis, the trial court valued the minority member’s 45% distributional interest at $347,863.23, which the Supreme Court affirmed.

For minority owners: Argue for valuation without minority or marketability discounts where oppression claims succeed, seek valuation dates that capture maximum value, and demonstrate that current depressed values result from oppressive conduct requiring adjustment. Engage valuation experts who can establish fair value methodologies favoring minority interests.

For majority owners: Establish that standard valuation discounts apply, that minority owners purchased discounted interests knowingly, and that current values reflect legitimate market conditions rather than manufactured depression. Present credible appraisals supporting fair value at levels protecting entity and majority interests. In LLCs, analyze operating agreement provisions addressing valuation methodology for buyouts.

Who I Represent

I represent minority shareholders and LLC members whose investments have been systematically devalued through oppressive conduct, as well as controlling owners and closely held entities facing oppression claims that threaten business continuity. Whether you are:

A minority shareholder or LLC member excluded from operations, denied information access, or frozen out of value realization
A majority owner, director, or manager facing claims challenging legitimate business decisions
A family business navigating disputes between founding generation and successors
A closely held corporation or LLC dealing with owner dissension or dissolution threats
Partners in professional entities with oppression dynamics

I provide strategic analysis calibrated to your position, business objectives, and relationship dynamics specific to closely held enterprises.

Engagement Process

After reviewing materials, I provide direct assessment of claim strength or defensive positioning, identify key leverage points, and outline strategic options—whether pursuing oppression remedies, defending against overreaching claims, or negotiating structured resolution. The objective is protecting your investment value, preserving business continuity, or achieving fair exit depending on your position and goals.

Contact: Call 864-242-4800 or use the contact form for confidential consultation. Oppression disputes in closely held corporations and LLCs require counsel who understands both minority protection and majority governance rights—let’s discuss your situation and strategic options.

Note: For a detailed analysis of the Wilson v. Gandis decision and its implications for South Carolina LLCs, see our blog post on this landmark case.