Simply stated, the majority rules. Under the New Jersey Business Corporation Act, unless otherwise required by such act, a corporation’s certificate of incorporation, bylaws or shareholders’ agreement, an action by the shareholders is authorized by a majority of the votes cast at a meeting. N.J.S.A. 14A:1-1 et seq. The same holds true for decisions made by the board of directors. However, the majority is not given unfettered control over the corporation. Minority shareholders receive heightened protection under New Jersey law.

The “oppressed shareholder statute” permits the court to “appoint a custodian, appoint a provisional director, order a sale of the corporation’s stock … or enter a judgment dissolving the corporation upon proof that … in the case of a corporation having 25 or less shareholders, the directors or those in control have acted fraudulently or illegally, mismanaged the corporation, or abused their authority as officers or directors or have acted oppressively or unfairly toward one or more minority shareholders in their capacities as shareholders, directors, officers, or employees.” In the case of a court-ordered sale of the stock held by a shareholder, the purchase price of the shares must be the fair value. Further, New Jersey law protects the minority shareholder through “dissenters rights,” which permits a shareholder to dissent from a vote of the shareholders with respect to certain proposed corporate acts and “make written demand on the corporation … for the payment of the fair value of his shares.”

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