of Illinois Lawyers
Shareholder Squeeze Out Law in Illinois
Shareholder squeeze out is a process in which the majority shareholders of a company force the minority shareholders to sell their shares at a reduced price. It is a legal process that is used to remove minority shareholders and gain full control of the company. Squeeze out law in Illinois outlines the process and requirements for majority shareholders to carry out a shareholder squeeze out.
Under Illinois law, majority shareholders may squeeze out minority shareholders only if certain statutory requirements are met. For instance, the squeeze out must be approved by the majority of shareholders with a minimum of two-thirds of the shares, which must not include the shares held by the majority shareholders seeking to carry out the squeeze out. Additionally, the majority shareholders must give written notice to all minority shareholders before carrying out the squeeze out. Furthermore, the shareholders must offer the minority shareholders a fair and reasonable price for their shares, and the price must be based on an independent valuation of the company’s assets.
One reason for carrying out a shareholder squeeze out is to remove dissenting shareholders who may be hindering business growth or development. Another reason could be to gain full control of the company without having minority shareholders who could potentially block business decisions.
However, while the squeeze out process may seem beneficial to the majority shareholders, it may have negative effects on the minority shareholders. For instance, they may be forced to sell their shares at an unreasonably low price, especially if the independent valuation of the company’s assets is not done properly. Additionally, minority shareholders may not be able to fully realize the benefits of their investment since they are being squeezed out of the company.
In conclusion, shareholder squeeze out can be a legal way for majority shareholders to gain full control of a company by removing minority shareholders. However, it must be done in accordance with the applicable squeeze out law in Illinois, which stipulates certain requirements to be met before carrying out a squeeze out. Therefore, it is essential for all shareholders to be aware of their rights and obligations under Illinois squeeze out law and to seek legal advice before carrying out a squeeze out.
You can contact one of our Illinois shareholder squeeze our lawyers for a free consultation at 630-333-0333.