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J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4385
Experience:  Experienced and trained in the area of business law.
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In a start-up company: 1. Are you able to order the CEO and

Resolved Question:

In a start-up company:
1. Are you able to order the CEO and CFO of a company to immediately freeze spending if you have 50.1% of the common stock vote?
2. Are you able to order the CEO and CFO of a company to immediately freeze spending if you have 3 out of 5 board seats vote?
Submitted: 4 years ago.
Category: Business Law
Expert:  J.Hazelbaker replied 4 years ago.

J.Hazelbaker :

Hello. Thank you for using JustAnswer.

J.Hazelbaker :

Under California law, you can force a regular or special meeting where you can force a resolution to be voted on.

Customer:

Hello.

J.Hazelbaker :

As long as their is a quorum, you can get your force resolution adopted.

Customer:

So a freeze in spending can't take place until the special meeting? I believe the required lead time in the bylaws is 48 hours

J.Hazelbaker :

As soon as the resolution voted and adopted, it goes into effect.

J.Hazelbaker :

Correct.

Customer:

ok. So in that 48 hour window, the CEO and CFO can continue to run the company and spend company funds for legitimate business purposes and this is not illegal?

J.Hazelbaker :

That is correct.

J.Hazelbaker :

As long as that spending is consistent with company policy and not a breach of their fiduciary duy.

J.Hazelbaker :

duty.

Customer:

Ok. Thank you. I think that answers everything.

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