A minority shareholder in a private corporation was notified of special meeting for amendment of the bylaws, changing the number of directors to one and officers to one. She thinks this would harm her materially. Can (how can) she get this delayed so she can obtain counsel? It would happen 07/18!
Country relating to Question: United States
State (if USA): Pennsylvania
Obtained copy of existing bylaws, and see the amendment process is amendment by substitution or on toto (not in part). Learned other shareholders are few and would not be supportive. Believe if meeting occurs as scheduled, no motion by her (to table, adjourn, etc.) would not receive a second.
No, she doesn't really have enough time to get an attorney to rep her by the 18th. This is McKean County with a very limited county bar, as is true in the neighboring counties. i was hoping for some guidance in seeking injunctive relief before such a sweeping change is made, so she has a little more time to obtain counsel.
Your previous expert has opted out, but I am afraid that as long as the bylaws were followed with regards XXXXX XXXXX notice period, she cannot present any legal argument to a court to delay the meeting. Her only chance is to try to get support to vote against the bylaw change and without such support I am afraid that legally one shareholder cannot stop a meeting that is held in accordance with the bylaws of an organization and they are bound by those bylaws just like the board and other members are bound.
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Yes, we know the law does not always support what we would like it to! I trust you were not patronizing us! We know how bylaws work, in general. We were hoping you might be of help in obtaining a TRO, and suggest how she might seek one pro se.
I am not patronizing you at all, that is a general reminder as the vast majority of our customers really do not understand that and it was not directed to you personally at all.You cannot get a TRO unless you can prove that you have 1) a legal basis for a lawsuit and 2) that you have a likelihood of success on the merits of that lawsuit. The court does not just issue a TRO as a dilatory tactic, which is what you are seeking to use it for here. Additionally, when someone files for a TRO they will have to put up a bond up to 2 times the amount of potential damages the injunction could cause to the other party. In order to file the TRO she needs to file a lawsuit which must have basis in law and fact for her suit and then in her motion for TRO she would have to show that she has a reasonable chance of winning on the merits of her suit and you have not given any indication here that she has a legal basis for such an action.
She believes that it would be harmful to the interests of the enterprise (the company, the corporation) to vest all power in one director and one officer--possibly the same individual!--rather than the board and the three-to four line officers as it the case under the present bylaws. She believed not requiring that person to be a shareholder divorces normal interest in the company from its management. She has concerns about prudent management and exercise of control over the company, and sees that poor management harms its interests and hence hers.
Unfortunately, that is still not a basis in law, people are harmed by corporate decisions all of the time but there has to be an actual legal basis for the suit. If her concerns are over breach of fiduciary duty to the company, then this has to be brought as a shareholder derivative action on the basis of the company which would mean a lawyer must be used as a person cannot represent the company pro se. There is also no law saying that a director must be a shareholder, so that is not a basis in law for opposing this matter. While all of these concerns are very real concerns, the company is not doing anything prohibited by law and if the bylaws do not prohibit them from doing this, she has to come up with some actual law that is the basis for her claim.
All corporate law, including non-profits and charitable fraternal organizations.
You are welcome. Thank you.
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