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Kahn v. Lynch Communication Systems, Inc.
Updated 11/2/23
Controlling shareholders owe fiduciary duties of care and loyalty to other shareholders and the corporation.
So what makes someone a controlling shareholder? Controlling shareholders are those that either (1) own a majority interest in a corporation or (2) exercise actual control over the corporation's business affairs.
In this case, Alcatel is held to be controlling shareholder (even though Alcatel owns only 43% of the company) because it bullies the directors to go against their own judgment in order to make Alcatel happy.
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