Freeze Out

AAA

DEFINITION of 'Freeze Out'

An action taken by a firm's majority shareholders that pressures minority holders to sell their stakes in the company. A variety of maneuvers may be considered freeze-out tactics, such as the termination of minority shareholder employees or the refusal to declare dividends.

Also referred to as a "squeeze out".

INVESTOPEDIA EXPLAINS 'Freeze Out'

Freeze outs usually occur closely held companies, where majority shareholders can converse with one another. Majority shareholders attempt to freeze out the minority from the decision making process, rendering minority voting rights useless. Such actions are often illegal and may be overturned by the courts.

RELATED TERMS
  1. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding ...
  2. Voting Right

    The right of a stockholder to vote on matters of corporate policy ...
  3. Voting Shares

    Shares that give the stockholder the right to vote on matters ...
  4. Minority Interest

    1. A significant but non-controlling ownership of less than 5 ...
  5. Tag-Along Rights

    A contractual obligation used to protect a minority shareholder ...
  6. Strategic Management

    The management of an organization’s resources in order to achieve ...
Related Articles
  1. What Are Corporate Actions?
    Bonds & Fixed Income

    What Are Corporate Actions?

  2. Knowing Your Rights As A Shareholder
    Investing Basics

    Knowing Your Rights As A Shareholder

  3. Who is responsible for protecting and ...
    Investing

    Who is responsible for protecting and ...

  4. If I reject the tender offer for acquisition ...
    Investing

    If I reject the tender offer for acquisition ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center