Freeze out


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Freeze out

The action of pressurizing shareholders with relatively minor amounts of stock to sell their shares after a takeover.

Freeze Out

1. In an acquisition, a provision in a charter allowing the acquiring company to buy out all minority shareholders in the target company for a fair price for a limited period of time. The freeze out provision usually lasts from two to five years following the acquisition.

2. A situation in which the majority shareholder(s) of a company pressure minority shareholders to sell their holdings. For instance, majority shareholders may conduct a freeze out by completely shutting minority shareholders out of the decision making process or by withholding pertinent (but not legally required) information.