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J. Warren
J. Warren, Attorney
Category: Business Law
Satisfied Customers: 2192
Experience:  Experience in general business transaction and formation matters.
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In a small S-Corp with very few shareholders, can the slim

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In a small S-Corp with very few shareholders, can the slim majority vote to remove a board member with no cause for removal other than vindictive reasons? What actions on the board member in question can be done to fight back?

Hello and Welcome! Thank you for allowing me to be of service to you. Please note: (1) this is general information only, not legal advice; and (2) I will provide you with honest information and not necessarily to tell you might be hoping to hear.

I am very sorry that you are dealing with this situation. Section 53-11-39 Removal of directors states that unless otherwise stating in the bylaws or articles of organization if a meeting is called expressly for the purpose of removing a director, he/she may be removed with or without cause by a majority of shareholders entitled to vote.

Here is a link to the statute:

The exception to removal with or without cause is if the Articles of Incorporation provides for 2 or 3 classes of directors to be elected and each class is to serve 1 term of office and then the next class steps in for the second term. If this is the case, removal must be for cause.

I am sorry the shareholder's have voted out a director for vindictive reasons. Unless the Articles of Incorporation or bylaws state removal of a director may only be for cause, a director does not have a claim of action against the shareholders for removal if a majority voted for such removal.

I apologize that this was probably not the answer you were hoping to receive. However, it would be unfair to you and unprofessional of me were I to provide you with anything less than truthful and honest information.

All my best & encouragement.

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