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FlaBusLawyer, Attorney
Category: Business Law
Satisfied Customers: 102
Experience:  Civil Litigator, Represents Small Businesses, Real Estate Attorney,
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we have a small corporation in california with 4 owners (my

Customer Question

we have a small corporation in california with 4 owners (my husband being one of them).. one of the owners uses the corporate bank account for his personal needs. Nothing in the past has been said since it was used for meals and entertainment. Now he is using it for withdrawing cash... how can we (my husband doesnt ever like feeling like the bad guy) approach this issue from a legal standpoint to stop it from happening in the future?
Submitted: 8 years ago.
Category: Business Law
Expert:  FlaBusLawyer replied 8 years ago.
You must look to the operating agreement, partnership agreement, or corporate by-laws, depending on the type of corporation you have. Your husband can bring a derivative lawsuit for breach of fidiuciary duty against the the owner who is using company's funds for personal use. The operating agreement/by-laws, should dictate whether his action is wrongful or not (for example, the operating agreement may authorize use of company funds for expenses, such as meals).
Customer: replied 8 years ago.
are there laws against withdrawing money from a corporate bank account? I know he wont bring a lawsuit... he just wants to approach the situation to do what is right for the company.
Expert:  FlaBusLawyer replied 8 years ago.
Yes, if an owner uses money inappropiately, and against the interest of the corporation, that owner could be liable for damages. However, a lawsuit may become neccessary to enforce the rights of the other owners. This is something that can be brought up with the one owner, by all the other owners. If the one owner does not stop doing what he is doing, then a lawsuit may be the only way to force him to stop.
FlaBusLawyer and other Business Law Specialists are ready to help you
Expert:  FlaBusLawyer replied 8 years ago.
Thank you for your acceptance. I hope this helps.

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