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Chris T., JD
Chris T., JD, Attorney
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Hello, I have 20 percent ownership in a California llc. I

Customer Question

Hello,
I have 20 percent ownership in a California llc. I am a working partner but yesterday I was to that I am no longer needed in the company and that they had voted me out. Are they able to just vote me out or am I protected as a minority shareholder? What step should I take after being verbally told this by other partners?
Submitted: 1 year ago.
Category: Legal
Expert:  Chris T., JD replied 1 year ago.

TexLawyer :

Good afternoon. I'll be assisting you with your question.

TexLawyer :

Are they just trying to remove you from your "hands on" duties, or are they trying to take away your ownership interest, too?

Customer: Good afternoon and thank you, XXXXX XXXXX trying to push me completely out of ownership also.
TexLawyer :

OK.

TexLawyer :

Then there are two issues here.

TexLawyer :

First off, they can't force you out of your shares without buying you out.

TexLawyer :

Whether or not they can force you to sell your shares is usually dictated by the articles of incorporation.

TexLawyer :

However, those shares are property that you own, and the majority cannot simply take them away without, at a minimum, compensating you for them.

TexLawyer :

As for the issue with your actual "hands on" duties, it really depends on how the company is set up, but, ultimately, the shareholdres can replace an employee, or order a manager to do so. If they have a majority of the votes, it does not matter that the person they are removing is also a shareholder.

TexLawyer :

That issue is, of course, separate from the property right you have regarding your shares. In other words, even if they take away your hands on responsibilities, that doesn't automatically take strip away your shares, too.

Customer: So basically I'd become silent without having to do any work or I can have them buy me out, correct?
TexLawyer :

Yes, you'd become a silent partner in the sense that you don't participate in the day-to-day operations, but you would still have a 20% share, which entitles you to voting rights.

Customer: Ok, so my next step should be a buyout or lawyer if they continue to say they can vote me out?
TexLawyer :

It all depends on what you want at this point. If you feel as though the company will increase in value over time, then you may consider holding onto your shares. If, however, you want out now, you can try to sell your shares back to the company.

TexLawyer :

Also, assuing your articles will allow you to do so, you can potentially sell your shares on the open market to an "outsider."

TexLawyer :

Lastly, if the majority is engaging in opressive conduct, you may have a right to sue them for, among other things, complete dissolution of the company. You can read more about that here:

TexLawyer :

So, if you just want out, my advice to you would be to first try to work out a deal with the other shareholders. That will get you your money, and help you avoid the expense of attorney's fees.

Customer: Thank you very much! You have been a great help
Chris T., JD, Attorney
Category: Legal
Satisfied Customers: 3913
Experience: Experienced in both state and federal court.
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Chris T., JD
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