Mandatory Buy-Outs as a Protection Mechanism for Minority Shareholders in Closely Held Companies in Ecuador
DOI:
https://doi.org/10.18272/n8aezk72Keywords:
Closely held companies, minority shareholders, mandatory buy-outs, right of withdrawal, Ecuadorian corporate lawAbstract
Closely held companies, the dominant corporate model in Ecuador, concentrate ownership and control in few hands, exposing minority shareholders to oppressive conduct. The lack of incentives and the absence of a secondary market intensify this vulnerability and force minority investors to seek exit mechanisms. This study examines the existing remedies—the right of withdrawal and the oppression action, which includes the mandatory buy-out—and shows that they are insufficient due to restrictive triggers, weak valuation criteria, and limited enforcement capacity. The central finding is the need to strengthen the right of withdrawal, adopt mandatory buy-outs, and establish specialized judges to close the gap between law in the books and law in action, ensuring real and effective protection for minority shareholders in closely held companies.
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