Cotton

In an action against the majority shareholders of a corporation for breach of fiduciary duties, a minority shareholder sought dissolution of the corporation and other relief. The majority shareholders invoked their rights to purchase the minority shareholder’s interest under Corporations Code section 2000. The trial court obtained an appraisal of the fair value of the shares that did not account for a related derivative action. The trial court confirmed the appraisal and deferred the date of the buyout until after the resolution of the derivative action. On appeal, the majority shareholders contend that the portion of the order deferring the purchase date was not authorized under section 2000. We conclude that a determination of the fair value of the shares of a corporation under section 2000 includes an assessment of the value, if any, of pending derivative actions and their effect on the fair value of the shares. The trial court’s order in this case did not comply with the provisions of section 2000, and therefore, must be reversed.

SECTION 2000

When a shareholder brings an action for involuntary dissolution, the corporation can avoid dissolution by purchasing the…