minority discount

minority discount. A reduction in the value of a closely held business’s shares that are owned by someone who has only a minority interest in the business. • The concept underlying a minority discount is recognition that controlling shares — those owned by someone who can control the business — are worth more in the market than noncontrolling shares. But when dissenting shareholders object to a corporate act, such as a merger, and become entitled to have their shares appraised and bought by the corporation, many courts hold that incorporating a minority discount into the valuation of the dissenters’ shares is inequitable and is not permitted. See APPRAISAL REMEDY . [Cases: Corporations 182.4(5), 584. C.J.S. Corporations §§ 348, 799–801.]
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