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TexLaw
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4080
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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We have a family business that my father started long ago that

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We have a family business that my father started long ago that is now in turmoil. My brother, the President owns 15%, I own 15%, my mother owns 60% and a loyal, now retired employee was given 10% when my father died. It was a very successful company (6 million plus) when my father died and my brother has bankrupted it. My mother is elderly and has just allowed it to happen rather than create problems. Now my brother is suing my Mom who is wealthy due to my father's income before he died.

It is getting ugly and now I notice that he is charging with bills that he is accruing from a new company that he has started on his own (another failed venture).

My question is -- How can we remove my brother as President. What steps should we take. We are already planning countersuit, but our lawyer has said nothing about stopping the bleeding.
Submitted: 2 years ago.
Category: Legal
Expert:  TexLaw replied 2 years ago.
Hi,

I'd be happy to help you with your question. However, I need you to answer a question before I can proceed:

What is the legal form of the entity? (LLC, Corporation, LP, or partnership)?

Is there any written operating agreement or bylaws?

I look forward to hearing back from you.

Best Regards,
Zachary D. Norris
Customer: replied 2 years ago.
It is a corporation and I have the bylaws here in front of me.
Expert:  TexLaw replied 2 years ago.
In that case, you would need to hold a meeting amongst the shareholders to vote out the president according to the procedures laid out in the by-laws. You would have to secure your mother's approval, as she has the majority vote.

What do the by-laws state as to the removal of an officer of the company?
Customer: replied 2 years ago.

officer may be removed with or without cause at any regular or special meeting of the board whenever in the judgment of the board of directors the best interests of the corporation will be served.

 

So, can my mother and I call a meeting, (which he will not attend), vote at the dinner table, and fire his ass? Sorry.

Expert:  TexLaw replied 2 years ago.
You will need to notify all the shareholders of the meeting, and you will need to make sure at least a "quorum" is present.

Do the by-laws state what the quorum rule is?
Expert:  TexLaw replied 2 years ago.
Also, you probably ought to think of this as more of a coup...you may have to take legal action and get an injunction to make him hand over the reigns of the company. He won't likely give up control voluntarily.
Customer: replied 2 years ago.

holders of a majority of shares but no less than 1/3. So we qualify, right?

 

Should I have his notice delivered by certified mail? What if he will not accept and say he was not notified?

 

 

Customer: replied 2 years ago.
How do I request you for further questions?
Expert:  TexLaw replied 2 years ago.
You and your mother will make a quorum, although its not a bad idea to get the employee shareholder in on this too.

As far as notice goes, the by-laws probably have something about that as well. However, he has a duty to accept certified mail, so if you send it to him that way and he refuses, he can't come back and claim he did not receive notice. Send it by regular mail too though, so he can't reject it.

The vote needs to be recorded, and reduced to writing in a corporate resolution. It might be a good idea to get a notary to notarize you and your mother's signatures on the resolution, so as to hedge against objections to authenticity.

The corporation resolution should state something like this:

On (date) the shareholders and directors of (Corporation) met, pursuant to a notice duly delivered under the by-laws of the Corporation and laws of the State of Texas. Present at the meeting were ________ (names).
A quorum is present.

Be it resolved that the directors and shareholders present, representing a 75% vote of outstanding shares, unanimously do hereby remove __________ from his office of President and terminate his employment by the Corporation in all ways.

Signed _____________(you and your mom).
Notarized.

Please let me know if there's anything else I can do for you.

Good Luck,
Zachary D. Norris
Expert:  TexLaw replied 2 years ago.
Find my name in the list of experts and send me a message if you need me on a follow up question.
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4080
Experience: Lead trial/International commercial attorney licensed 11 yrs
TexLaw and 18 other Legal Specialists are ready to help you
Customer: replied 2 years ago.

I am selecting "Great Service" to rate your answer, but it is not accepting. The faces are grayed out. What should I do?

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