In January of 1994, the New Jersey Legislature enacted the New Jersey Limited Liability Company Act, N.J.S.A. 42:2B-1, et seq, which permits business owners to form and use limited liability companies as an alternative to the traditional corporation. When it enacted the new set of laws pertaining to LLCs, the Legislature did not incorporate the “Minority Oppression” statute contained in the New Jersey Business Corporation Act, which provides certain protections to minority shareholders of closely held companies who are subjected to oppression. Generally, “oppression has been defined as frustrating a shareholder’s reasonable expectations.” Brenner v. Berkowitz, 134 N.J. 488, 506 (1993).
Almost 15 years after the enactment of the LLC Act, the New Jersey Legislature is considering enacting a revised Limited Liability Corporation Act which may provide similar protections to those enjoyed by oppressed shareholders in closely held corporations. One purpose of this article is to advocate the inclusion of protections afforded by the Minority Oppression Statute, N.J.S.A. 14A:12-7(c), when the New Jersey Legislature revises the LLC Act. Another aim is to urge the judiciary to offer the same protections available to oppressed minority shareholders to similarly situated minority members of closely held limited liability companies. Finally, this article provides insight relating to the representation of minority members at the time the LLC operating agreement is drafted.
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