Freeze out

Definition of Freeze out

Refers to a process, usually in a closely held corporation, by which minority shareholders are prevented from receiving any direct or indirect financial return from the corporation in an effort to persuade them to liquidate their investment in the corporation on terms favorable to the controlling shareholders. The use of corporate control vested in the statutory majority of shareholders or the board of directors to eliminate minority shareholders from the enterprise or to reduce to relevant insignificance their voting power or claims on corporate assets. It implies a purpose to force upon the minority shareholder a change which is not incident to any other business goal of the corporation. Gabhart v. Gabhart, Ind., 370 N.E.2d 345, 353. See also Squeezeout.

That's the definition of Freeze out in Black's Law Dictionary 6th Edition. Courtesy of