Freeze Out


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".


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.

  1. Voting Right

    The right of a stockholder to vote on matters of corporate policy ...
  2. Tag-Along Rights

    A contractual obligation used to protect a minority shareholder ...
  3. Minority Interest

    1. A significant but non-controlling ownership of less than 5 ...
  4. Majority Shareholder

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

    Shares that give the stockholder the right to vote on matters ...
  6. Employee Stock Option - ESO

    A stock option granted to specified employees of a company. ESOs ...
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