holding that a close corporation’s directors breached the fiduciary duty owed to other shareholders and that “[purchase by the corporation confers substantial benefits on the members of the controlling group whose shares were purchased [and t]hese benefits are not available to the minority stockholders if the corporation does not also offer them an opportunity to sell then-shares”
How later courts described this case
- holding that a close corporation’s directors breached the fiduciary duty owed to other shareholders and that “[purchase by the corporation confers substantial benefits on the members of the controlling group whose shares were purchased [and t]hese benefits are not available to the minority stockholders if the corporation does not also offer them an opportunity to sell then-shares”
- explaining that, in contrast to close corporations, there is a “somewhat less stringent standard of fiduciary duty to which directors ... of all corporations must adhere in the discharge of their corporate responsibilities.” (emphasis added)
- holding that "stockholders in the close corporation owe one another substantially the same fiduciary duty in the operation of the enterprise that partners owe to one another” in context of dispute over corporation's repurchase of shares
- comparing a close corporation to a partnership and holding that “stockholders in the close corporation owe one another substantially the same fiduciary duty in the operation of the enterprise that partners owe to one another”
Written by the judges who cited it.
Distinguished
Distinguished by Brodie v. Jordan, 447 Mass. 866 (2006)
The remedy in Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578, 603 (1975), is readily distinguishable.
The opinion
Wilkins, J.
(concurring). I agree with much of what the Chief Justice says in support of granting relief to the plaintiff. However, I do not join in any implication (see, e.g., footnote 18 and the associated text) that the rule concerning a close corporation’s purchase of a controlling stockholder’s shares applies to all operations of the corporation as they affect minority stockholders. That broader issue, which is apt to arise in connection with salaries and dividend policy, is not involved in this case. The analogy to partnerships may not be a complete one.