Posted in Corporate Law
Being on the board of directors of a corporation requires communication and cooperation in order to succeed. It’s a good idea to have board members with different backgrounds and approaches, but such differences could reach a breaking point. It could get to the point where a board member (or members) could be prevented from doing his or her duties in the hopes that member would resign. This situation is known as a freeze out.
That’s apparently the situation at Huntington Beach-based apparel maker and seller Quiksilver Inc. Board member Elizabeth Dolan resigned from the corporation’s board in May, claiming she was excluded and prevented from making decisions, according to the Orange County Business Journal.
She wrote in a letter to fellow directors was she left out of “crucial board discussions and votes…Indeed, your lack of trust in me has been made clear. On my end, this can’t be rebuilt.”
She joined the nine member board in 2014 and was the only female director. Dolan works as the chief marketing officer at Fox International Channels (part of 21st Century Fox) where she manages brand development, consumer communications, new programming and trade marketing for more than 350 television channels in Asia, Latin America, Europe and Africa. Dolan was re-nominated for another term in February. Andy Mooney was fired by the board as Quiksilver’s CEO in March, after being on the job for two years.
Shareholder oppression or freeze-out often happens in corporations smaller than Quiksilver where ownership is held by a small group of people. In “close corporations” the relationships amongst shareholders and management must include trust, confidence and absolute loyalty (what makes up a fiduciary relationship). Disloyalty and self-serving conduct can result in bickering, corporate stalemates and possible dissolution.
If you think your company may be at risk for a freeze out or shareholder oppression, or that’s happening right now, contact our office. We can talk about what’s going on and the best options you can take to protect your interests.