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Is it possible to become a chareholder of the corporation by borrowing the money from the corporation instead of bringing your own money. For example, getting a note from the corporation.
State/Country relating to Question: United States
It is possible. Usually you can bring in "skull" or "sweat" equity into the corporation as your legal share. (in other words, your brain work or your grunt work on behalf of the entity can count for a percentage of ownership if you are not able to bring in money).Sincerely,Dimitry Alexander Kaplun, Esq.
When the new person signed the note and received the shares for the note, he became a majority shareholder. He never paid off the note and even didn't make a single payment. Are the shares of this shareholder valid?
Who authorized the share transfer? The Board?
Yes, the Board. Aslo it's a Texas corporation operating in California.
Although the transaction, on its' face, looks mighty suspicious, it may be legitimate if the new board member is providing some sort of benefit to the organization--for example the board typically authorizes stocks for an incoming president or other officer of the organization. If there is no net benefit, and other shareholders exist, it may be wise to have consultation with a securities attorney because the board may very well not be acting in the best interest of the entity and could be accused of breaching their duty.Sincerely,Dimitry Alexander Kaplun, Esq.
Attorney
JA Mentor, Licensed in PA & NJ, specialize in business/contract disputes, estate creation & admin