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TJ, Esq.
TJ, Esq., Attorney
Category: Business Law
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Experience:  Licensed to Practice Law
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I am one of 4 shareholders in a company. I and one other partner

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I am one of 4 shareholders in a company. I and one other partner own 20% and a father and son own the remaining 60%. The son does not work in the company has all company benefits, autos, a salary of $21,000.00 a month but never enters the building. He own another company and is active in that one. Is this legal when the son get benefits that me and the other active owner do not receive.
Submitted: 5 years ago.
Category: Business Law
Expert:  TJ, Esq. replied 5 years ago.
Hi. Can you explain how things are managed? Are there officers? Directors? Do you have shareholder meetings? Or are things very informal?
Customer: replied 5 years ago.
We do have officers and occasional shareholder meetings.The company is small so it is operated informally. Mark McMillen, Wallace - the father and myself founded this company in 1999 with the agreement that Barry his son would not be a part of it ( gentleman's agreement). Barry has already ran 2 other companies into the ground there we did not want him as a partner. But Barry was in need so we agreed for him to come to WORK. In 2002 his Dad gave him 30 shares . Just like me and Mark he has an employment agreement saying he can not be gainfully employeed anywhere else. The issue began when I finally had to put my foot down about the engines for boats etc Barry has putting on the company cc and now Wallace( the father is doing everything he can to make me quite or sale my share at an ungodly price. We do 18,000,000 in sales a year @ 20 GP. I know this is more than you need, but in NC there is employment at will and he has already consider firing me but Mark the original partner would not agree. Now he repeated over turns decisions I make in front of my employees and yells at me and I have lost all respect in front of my staff. I do not want to hurt anyone but things have to change and I can not just quit. I am 55 and this is my future.
Expert:  TJ, Esq. replied 5 years ago.

Thanks for the additional information. I just wanted to get a feel for how things were run because it probably will make a difference in what you decide to do.

The botXXXXX XXXXXne is that you do have legal recourse, but you may want to think this through before taking action. As a shareholder, you have an interest in making sure the company’s resources are used for company business. Giving the son, who doesn’t work there, a salary, letting him use company funds for personal expenses, the breach of the employment agreement, etc. are all improper. As a shareholder, you have the right to demand that the company stop spending funds in that way, and if the demand is ignored, then you may sue the father (and maybe the son), on behalf of the company, for allowing it. Assuming you were to win, the company would need to reimburse you for your attorney’s fees.

The problem, as you pointed out, is that you need to keep your job. Just because you’re a part owner doesn’t necessarily mean you can continue working there if the majority owners do not want you there. And they may not want you there if you cause them trouble. Unfortunately, I do not believe there is a legal way for you to protect your job. So, you’re going to need to weigh your decisions carefully, and you may opt not to stir the pot at this point.

I wish I could offer something more, but you’re truly between a rock and a hard place since you want to keep your job.

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

 

TJ, Esq., Attorney
Category: Business Law
Satisfied Customers: 9762
Experience: Licensed to Practice Law
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