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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41220
Experience:  Run my own successful business/contract law practice.
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My business has (technically) 3 shareholders. 1 has no controll

Customer Question

My business has (technically) 3 shareholders. 1 has no controll over day to day operations, but she owns 45 % of business. How can we legally get her out of the business entirely, assuming she will not accept a buyout?
Submitted: 5 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 5 years ago.
Thank you for your question.

Actually you can still pursue two options. First, you can look to your articles of operation which should have a clause for how to remove a shareholder and how to calculate her value of the business. If that fails, you can pursue a formal dissolution of the business under which she will be granted a 45% of the value, and the remaining shareholders will be able to re-incorporate together under the same entity but without the third shareholder. The first option is by far cleaner and cheaper as a full dissolution will require a lot of costs to accountants so as to properly calculate the value of the assets.

Good luck.
Dimitry K., Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 5 years ago.
What if, at the time of her firing & vote out of office, we left her with everything she needed to start up again? This included desks, printer, 2 computers, fax machine, cubicles plus a whole lot more. This is all documented. Plus we have been in arbitration at least twice trying to settle this (since July 2004). Additionally, many clients went to her for services (we are a tax and accounting firm) during the next tax season, only to come back to us during the following (2005 taxes done in 2006) season. Since the breakup she has aquired a financial felonly on her record for taking out a Home Depot card in the Corporate name and signed as President (August 2006, 2 yrs after breakup) and is now in court custody for a mandatory mental evaluation for, as the judge put, "pathological lying to the court. This during her probation revoke hearing-she's looking at 5 years.
Expert:  Dimitry K., Esq. replied 5 years ago.
Thank you for your follow-up.

I understand, but unless you have a corporate/professional malfeasance clause in your articles of operation, even her "for cause" removal does not in any way cancel out her ownership. To do so you will have to actually pursue a court order splitting the business if she is failing to otherwise consent to the split. You can essentially remove her as an officer of the business but she still remains owner/shareholder.

I am sorry.
Customer: replied 5 years ago.

Thanks a bunch, I really appreciate your time.

 

Donna

Expert:  Dimitry K., Esq. replied 5 years ago.
Donna,

Anytime! Good luck to you and to the other shareholder!

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