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MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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My husband and his brother each own 50% of the shares in an

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My husband and his brother each own 50% of the shares in an S-Corp. in PA. They were partners from 1982 until they incororated in 1998. I have played a major role in the business for 28 years. I have been the Secretary/Treasurer since 1999 and on the Board since 2005. My Brother in-law married about 15 years ago and his wife has been trying to talk him into getting rid of me for the last 10 years. At our annual meeting last year he would not vote for me as a Director. However, I suspected that would be the case so I prepared myself by talking with our corporate attorney about our By-Laws and what to do if one of the Shareholders votes for me and the other doesn't. Would that constitute a tie and, if so, how to break the tie. He said yes it would be a tie and you can't have a tie so one of the Board members would vote to break the tie. I am the only other Board member so I asked him if I could still do that. He said yes. So when he would not vote for me as a director and my husband did vote for me, we registered this as a tie and so I voted yes for me and broke the tie. We then voted for officers and we voted for my husband as President (removing my brother in-law as president), We voted for him as VP and I remained Secretary/Treasurer. This really upset him and he has been fighting this ever since. I got a second opinion from your site last year in this regard and your attorney agreed that according to our By-laws I would break the tie and stay on the Board. Since then my brother in-law has consulted an attorney that says this was not lawful and if he doesn't want me on the Board he should just vote for himself and my husband would be forced to vote only for himself, thereby removing me from the Board. At past annual meetings they always voted yes or no for each person but his attorney says not to do it that way, vote all of his shares for himself. Since there would be no way for me to get a majority I would be out. Then the two of them would make up the Board and they would have a stalemate over who the officers would be, because my husband would vote for himself to be President, his brother as VP and me to remain S/T. His brother will vote for himself to be President and my husband to be S/T and not vote for me at all. At this point I don't know what to do. I can't believe that my brother in-law would let his wife's hatred for me come between us to this point. I also can't believe that I can be put out just because he wants it that way. He and my husband own this business 50/50 and I have been instumental in the decisions od this business for 28 years. Is there anything I can do to protect myself from being put out. I still think our By-laws override what his attorney says but then I am not an attorney so I can not be sure. Unfortunately our corporate attorney has washed his hands of us because he has been our attorney from day one and he can't believe we are having this problem getting along. My brother in-law's wife called him several times in a rage over things and he finally told us that he would not get involved any further. We have not gotten a new corporate attorney because my broth in-law will not agree to one. My husband and I do not want to have anything to do with getting an attorney of our own, we were always hoping he would come to his senses. We want to do things legally but we also want to protect ourselves. Can you give me some advice? If you need to see our By-laws I can upload them for you to look at. I must admit that when we incororated none of us knew how to operate as a corporation. Now I am not sure that our straight yes or no voting for Directors was the right way to do it, but that is the way we have done it every year. All these past years we never had a problem, we always agreed. Now what do we do?
Submitted: 2 years ago.
Category: Business Law
Expert:  MShore Law replied 2 years ago.
Thank you for the post, I am happy to assist you by answering your questions. You are correct in that the bylaws govern and each shareholder has agreed to comply with the terms of the bylaws so long as the bylaws are in place. The tie breaking provisions of your shareholder agreement govern, as such you are the treasurer. Please let me know if you need additional guidance.
Customer: replied 2 years ago.
You didn't really answer my question about the way to vote.
Expert:  MShore Law replied 2 years ago.
In order to amend the way you all vote, you have to amend your bylaws (I assume your bylaws stipulate the manner of voting). Do your bylaws indeed stipulate this?
Customer: replied 2 years ago.

Is there a way for me to upload a copy of our by-laws?

 

Expert:  MShore Law replied 2 years ago.
Yes, as a pdf you can attach the file to your next post.
Customer: replied 2 years ago.
I don't see how to do that. The paper clip on the tool bar just says image file not pdf.
Expert:  MShore Law replied 2 years ago.
are you able to load it as an image, if so, that would work as well.
Customer: replied 2 years ago.
No I have it as a pdf. How do I load a .pdf
Expert:  MShore Law replied 2 years ago.
Save your pdf as a Jpeg file on your computer, then upload it.
Customer: replied 2 years ago.

I tried to save as a jpeg but it won't do that. I will have to scan them in as a jpeg file.

Expert:  MShore Law replied 2 years ago.
would it be easier to type the relevant sections?
Expert:  MShore Law replied 2 years ago.
Did you decline the offer of contract review?
Customer: replied 2 years ago.
I'm sorry I did not see that offer. What was it?
Expert:  MShore Law replied 2 years ago.
I will have customer service to resend it. It was an offer for the review of the contract as contract review is beyond the scope of a standard question. It should arrive momentarily.
Customer: replied 2 years ago.
I know my question is complicated and I need a correct answer not a cookie cutter response, that is why I sent the by-law pages. Thanks you for your help.
Expert:  MShore Law replied 2 years ago.
Thank you, I would be happy to offer the additional service necessary to answer your question to your satisfaction. You should receive another message regarding the value of your deposit.
Customer: replied 2 years ago.
No thank you. If I am going to spend several hundred dollars I will find a local attorney. Since my question was not answered will I have to pay the $60 anyway?
Expert:  MShore Law replied 2 years ago.
No, you do not, however if you would like me to answer based on a limited review of the contract, exclusive to a section or sections you identify that can be arranged for the value of your deposit.
Customer: replied 2 years ago.

No thank you. I do not want an answer based on partial information. What good would that do? I am not satisfied with the responses from you, so you can close this transmission.

Expert:  MShore Law replied 2 years ago.
ok, I will opt, best of luck.
Customer: replied 2 years ago.
Please remove the pages I uploaded? Thank you
Expert:  MShore Law replied 2 years ago.
Regrettably, I do not have the power to do that. I will alert customer service, perhaps they can assist you with that request.

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