Under 15 Pa.C.S. §1767, a Court may appoint a custodian for a corporation upon the application of a shareholder.  First, the shareholder must demonstrate that the directors or those in control of the corporation have acted illegally, oppressively or fraudulently towards one or more of the complaining shareholders.  Second, the shareholder seeking the appointment of the custodian must own at least five (5) percent of the outstanding stock.  
 
As per the first prong, Pennsylvania like New Jersey and New York has adopted the “reasonable expectations” test to define oppression. Gee v. Blue Stone Heights Hunting Club, Inc., 145 Pa. Commw. 658, 604 A.2d 1141 (1992). 
 
Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.