I am 49% owner in a corporation. 51% patner is making very bad decisions. What rights do I have as a minority shareholder?

A majority shareholder has an obligation, or legally speaking, a duty to the minority shareholder not to "waste" corporate assets. This would, of course, include not engaging in harmful or unlawful activities which could result in financial loss to the corporation. Each state has its own laws regarding the duties of the majority shareholder to the minority shareholder. You should consult with an attorney in your state to find out what your rights are. Donald J. Cayea

Have the shareholders elected directors? Have those directors elected officers? Is this shareholder the president? What is your role? In the corporate context, a shareholder does not have day-to-day authority in the corporation. That authority is generally for the president under the guidance of the board of directors. In a close corporation those roles may be held by one person. Since your post does not clarify these issues, you should start with having this corporation appropriately establish the roles. I would recommend that you review your written bylaws and state statutes as to managing the corporation and then proceed as required to assign positions if that is not already been done.

The issue of minority rights usually arises within the context of what events termed dissension, deadlock, and oppression. Once you have established the appropriate roles and duties you can then move to determination of your exact issue. I would strongly recommend that you contact a local business attorney immediately.

DISCLAIMER—This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship.

I don't disagree with the answers previously posted by Mr. Cayea and Mr. Murillo, but I would approach your question a bit differently.

The short answer to your first question -- do you have any recourse -- is "Yes, but ...."

That is to say, the relevant corporate laws -- which I'm assuming are Texas', but that depends on how the business was set up and where it was incorporated -- may give you theoretical protections that don't turn out to have much practical value in real life.

In general, the whole point of someone having majority control over a company's voting stock is to ensure that minority owners have very little say-so in the day-to-day operation of the business and to ensure that the majority owner's discretion is nearly absolute on nearly everything that's even arguably a "judgment call" about what's best for the business. That's why, in general, one should be very careful about taking a minority interest in someone else's business: When and if things so south, the minority partner or shareholder's rights are, in general, quite limited unless he or she has bargained for and obtained, in writing, some up-front protections.

Even assuming that the majority owner's decisions and actions are all provably, genuinely outrageous -- such that any objective observer would conclude that they amount to "corporate waste" and can't possibly be justified as legitimate exercises of business judgment -- then to enforce the rights that you have as a minority owner, you'd have to jump through some formal hoops first before you could go to court.

Both to help you do that hoop-jumping and then to represent you in court, you'd need detailed advice from a competent lawyer who's experienced in both small business litigation and corporate control issues. Your average car crash lawyer won't know the business law aspects off the top of his head, and your average general practitioner or business-advice "deal lawyer" won't have the necessary street-fighting skills. You will probably have to hire someone on an hourly rate basis -- it's unlikely that a contingent fee arrangement could be structured to fit your situation -- and so there will be a continuing question of whether the money you're spending on legal fees and expenses is cost-effective (i.e., whether it's worth spending that money to keep the value of your minority investment from dropping, eventually, to zero). And these struggles tend to be long and expensive -- sometimes resulting in the effective liquidation of the business as a consequence of the litigation.

But you can't begin to answer that question until you get detailed advice from a lawyer who's fully clued in on all the background facts and operative documents.

Bottom line: You need a lawyer -- face to face, not via just an internet consultation, and sooner rather than later (like right now) -- to help you evaluate your theoretical rights AND to help you decide whether it's practical and cost-effective for you to pursue them.