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.
A person or entity that owns more than 50% of a company's outstanding ...
The right of a stockholder to vote on matters of corporate policy ...
Shares that give the stockholder the right to vote on matters ...
1. A significant but non-controlling ownership of less than 5 ...
A contractual obligation used to protect a minority shareholder ...
Shareholders who hold their shares directly with a company.