Can You Be Forced Out as a Shareholder? Understanding Buy-Sell Agreements and Remedies

Owning shares in a business often feels like security; you invested time, money, and trust into something you helped build. So, the question many shareholders eventually face is a tough one: can you actually be forced out of your own company?

The answer is… sometimes yes, sometimes no. And usually, the real answer lies inside a document many shareholders do not fully read or understand: the buy-sell agreement or shareholder agreement. If that document is silent, Florida law provides certain protections and remedies, especially when majority shareholders abuse their power.

Can Shareholders Be Forced to Sell Their Shares?

If you are a shareholder in a corporation or member in an LLC, whether you can be forced out usually depends on what you agreed to at the beginning. Many businesses use:

• Shareholder Agreements
• Buy-Sell Agreements
• Operating Agreements (for LLCs)

These agreements often include forced-sale provisions, drag-along rights, or redemption clauses that allow a company or majority owners to force a buyout under certain conditions.

Common situations where forced removal may occur include:

• Breach of fiduciary duties
• Violation of company policies or agreements
• Deadlock among owners
• Misconduct affecting the business
• A planned sale of the company where all shareholders are required to sell

If these provisions exist and were validly drafted, they are usually enforceable in Florida.

But what if there is no agreement or the majority owners are simply bullying a minority owner? That is where legal protection becomes important.

What Is a Buy-Sell Agreement and How Does It Work?

A buy-sell agreement establishes the rules for when and how ownership interests can be sold or transferred. Think of it as a business “pre-nup.”

A strong buy-sell agreement typically answers questions like:

• Who can force a buyout and when?
• How is the business valued in a buyout situation?
• What happens if an owner dies, retires, or becomes incapacitated?
• Can the majority remove a shareholder?
• Does the minority shareholder have protections against unfair pressure?

For Florida businesses, these agreements are powerful because courts often defer to what the parties agreed to in writing.

Can Majority Shareholders Squeeze Out or Freeze Out Minority Shareholders?

Unfortunately, yes, and it happens frequently in small to mid-sized privately held companies. This often looks like:

• Cutting off dividends or profit distributions
• Blocking access to financial records
• Diluting ownership percentages
• Removing the minority from management roles
• Forcing unfair buyout terms
• Harassment or pressure to sell

This is commonly called a freeze-out or squeeze-out, and Florida law recognizes these tactics as potential shareholder oppression in certain situations.

What Legal Remedies Do Minority Shareholders Have in Florida?

If you are being pushed out, you are not powerless. Depending on the facts, Florida law allows several remedies including:

Filing a Lawsuit for Shareholder Oppression or Breach of Fiduciary Duty

Majority shareholders owe certain duties. If they abuse their control to harm you or the value of your interest, you may be able to sue.

Seeking a Court-Ordered Buyout

Courts may order a fair, independently valued purchase of your shares if frozen out.

Requesting Dissolution in Extreme Cases

If the business is being run illegally, fraudulently, or oppressively, dissolution may be requested, although it is typically a last-resort remedy.

Enforcing the Shareholder Agreement

If the majority is violating the agreement you signed, courts can enforce your contractual rights, stop improper removal efforts, or invalidate unfair provisions.

What If There Is No Buy-Sell Agreement?

Many Florida businesses start with enthusiasm but without structure. When there is no buy-sell agreement, disputes become much harder. Courts then rely on Florida corporate and LLC statutes to determine rights. This can mean:

• Litigation becomes more complex
• Business operations may be disrupted
• Your financial recovery may take longer

This is why proactive planning matters.

How to Protect Yourself Before a Shareholder Dispute Happens

Whether you are already facing pressure or you simply want to protect yourself, here are smart steps:

1. Have a strong shareholder or operating agreement drafted
2. Ensure valuation methods are clear and fair
3. Define when forced buyouts are allowed
4. Include protections for minority shareholders
5. Review agreements regularly as the business grows

Working with experienced business litigation and transactional counsel helps ensure the agreement is reasonable, enforceable, and balanced.

If You’re Being Forced Out or Threatened With Removal, Get Guidance Early

At our law firm, we work with business owners, shareholders, and partners dealing with disputes, buyouts, squeeze-out attempts, and forced removal issues. Our approach is practical, strategic, and focused on protecting both your investment and your long-term interests. 

If you are in Florida and facing a forced buyout, majority pressure, or uncertainty about your rights as a shareholder, contact one of our experienced attorneys in Miami at 305-570-2208.

You can also contact our team directly at: arianna@ayalalawpa.com   

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].