Reference no: EM13874816
Manu Inc. ("Manu") is a specialized manufacturing corp that has been in business for 22 years. Walter and Jane Smith, husband and wife, founded the business and own 60 percent of Manu's outstanding common stock. They are Manu's only directors. Manu has always been profitable. Walter annually draws a salary and bonuses totaling 400k to 500k.
Manu has had 4 executive employees, including Linda, for many years. AP proximately 5 yrs ago, they were each granted as additional compensation, 10% of Manu's outstanding common stock. Historically, they have each annually been paid a salary and bonus equal to 180k to 210k. There has never been a shareholder buy-sell agreement between Manu and its stockholders.
Seven months ago, Walter and Linda had a major falling out over the termination of a junior employee. Linda wailed in protest until Walter finally exclaimed, "that's it, Linda. I've had it w/ you and your complaining. You are now finished. I can't put up with you any longer" Linda was instantly terminated. She was paid 6 months of severance pursuant to a simple employment agreement.
After cooling off for a month, Linda sent Walter an email requesting that either Manu or Walter buy her Manu stock. Walter's respond was curt: "Manu doesn't need your stock. I don't want your stock. No one else will want to buy your stock. There is no market for the stock. I don't want your stock. No one else will want to buy your stock. There is no market for the stock, and there never will be. Manu has never paid a dividend and never will. As you well know, Manu pays its earnings to the team that makes it happen here. Because of your intolerable complaining, you are no longer part of that team. Thus, you should not expect any return on the Manu stock that you were given years ago."
Linda wants to know if she has any rights as a minority shareholder in this situation. What additional facts would you like to have? In a legal proceeding, how should the issues and allegations be framed on behalf of Linda? What standard of review should the court use?
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