I. Board of Directors
A. Guaranty representation of minority shareholders on the corporation's board of directors with one of the following devices:
1. Class voting for the election of directors.
2. Cumulative voting.
3. Shareholders’ voting agreement.
B. Provide the director or directors elected by minority shareholder with an effective voice in corporate affairs by imposing high quorum or supermajority voting requirements on the board of directors.
II. Dispute and Deadlock
A. Require arbitration of shareholder disputes.
B. Have shareholders or groups of shareholders who may deadlock enter into a cross-option, or Solomon's choice, agreement to resolve possible deadlocks.
III. Distribution of Corporate Funds
A. Protect minority shareholders’ ability to receive distributions of corporate funds with one or more of the following devices:
1. Dissolution agreement permitting minority shareholders to dissolve the corporation.
2. Long-term employment agreements for minority shareholders.
3. Mandatory dividend distributions in certain circumstances.
B. Limit majority shareholders withdrawals by imposing limits on compensation payable to shareholder employees.
IV. Shares and Shareholder Action
A. Limit the possibility of dilution of minority shareholders’ shares by providing for shareholder pre-emptive rights.
B. Provide minority shareholders with veto power over certain shareholder actions with supermajority voting requirements or high quorum requirements.
V. Shareholder Agreements
A. Minority shareholder rights can be protected by a comprehensive agreement between the shareholders and the corporation. The adoption of a buy-sell agreement will afford minority shareholders protection against transfer of majority control to third parties.