In a close corporation, which statement best describes the duty framework and remedies for oppression?

• A. The majority must act with utmost good faith and loyalty, and the minority can prevail by showing the same goal could have been achieved with less harmful means.
• B. There are no fiduciary duties in a close corporation.
• C. Oppression claims never lead to dissolution.
• D. A majority's lawful decisions are immune from challenge.

Answer: (A)

In a close corporation, the controlling shareholders owe fiduciary duties of loyalty and fair dealing to the minority. When those duties are breached through oppressive conduct—using control to advance personal interests at the minority’s expense—the law provides remedies to prevent unfair prejudice. The best description is that the majority must act with utmost good faith and loyalty, and the minority can prevail by showing that the same business objective could have been achieved with less harmful means. This captures both the duty to act fairly and the idea that relief is available when conduct is oppressive, not just when a breach of contract occurs. Remedies can include injunctions, buyouts, or even dissolution if oppression is proven and no adequate alternative relief exists. It’s not correct to say there are no fiduciary duties in a close corporation, nor that oppression claims never lead to dissolution, nor that lawful majority decisions are immune from challenge.