Determining the ‘Fair Value’ of Shares Of Closely Held Corporations

Disputes between shareholders of closely held corporations are extremely common. In the usual case, a shareholder with more than a 20 percent interest in the corporation petitions for judicial dissolution as a remedy for “illegal, fraudulent or oppressive conduct” under New York Business Corporation Law (BCL) §1104-a. The other shareholder, the respondent in the dissolution proceeding, then exercises his or her statutory right under BCL §1118(a) to “elect to purchase” the shares owned by the petitioner at their “fair value.”