Thanks for finding me.
Give me a few minutes to read your question.
1. The by-laws are undated and were not filed.
Do you have any record where the board of directors approved the by-laws?
2. Alleged Breach of Fiduciary Duty by your mother.
The unauthorized withdrawal of company funds and isolation of the same from the company is on its face suspicious. However, arguably this was done in order to protect the company from misappropriation of company assets by the President.
The presence of the safe harbour provision in the by-laws does provide her with some shelter, as the money has been kept in the form of cashiers checks and has not been converted by her personally.
The actions of the President in paying his own account from the sale of equipment could be argued as an illegal dividend, to which your mother, as secretary, acted upon her authority to protect the company's operational ability.
sorry...I mean, as treasurer.
The question that is raised in my mind is whether there is any provision in the by-laws which require board approval for the movement of the funds.
Also, look to see in the by-laws or the incorporating instrument to see if there is any requirement that the by-laws be approved by a super majority.
If not, and if there is no documentation that the by-laws were previously approved, call a board meeting and issue a corporate resolution approving the by-laws. Also issue a corporate resolution authorizing your mother's movement of the funds.
If I recall correctly, you are in Texas, which does not require that by-laws be filed.
Thus, you may have some challenge as to their authenticity, which can be simply overcome with the testimony of your mother as present during their original drafting. Also you can prove them up as an official record of the company with a business records affidavit.
I see that you have likely stepped away, or I am not otherwise receiving your responses. I'm going to switch out of the IM format over to the Q&A format.
Please communicate with me that way.
I am in Texas and have researched that the bylaws do not require filing, unfortunately. There are no signatures of approval on the document.
The bylaws were drafted in 1977.
There is no super majority verbage.
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Yes, she has retained a lawyer. However, after visiting his office with my mother, I am not very confident. My mom lives in a very small town in East Texas and I feel that he is over his head. (respectfully).
We are going through discovery and have presented them with documents they have requested.
We have a hearing next Friday.
I just don't understand how all issues are not moot in the light of his thievery for 15 years. We have many invoices plainly showing his embezzlement.
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