North Carolina Business Litigation Report

Garlock v. Hilliard, 2001 NCBC 10 (N.C. Super. Ct. Nov. 14, 2001)(Tennille)

The plaintiffs in this case sought the dissolution of a closely held corporation pursuant to N.C.G.S. §55-14-30(2)(ii) on the ground that the business of the corporation was being conducted to the unfair advantage of the majority shareholder. The Court found that dissolution was appropriate because the reasonable expectations of the majority shareholders were not being met.

Since the dissolution statute gives the corporation the opportunity to avoid dissolution by paying the oppressed shareholders the "fair value" of their shares, the Court moved on to a discussion of that concept. As it had in the Royals case, the Court considered market value, equitable considerations, practical considerations and changes in condition of the company from the market valuation date. It determined that it would be inappropriate to apply discounts for lack of control and lack of marketability. The Court also ruled that the purchase price could be paid over a period of 36 months.

Full Opinion

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Mack Sperling
Brooks Pierce, LLP
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