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Can stock of an s corp be transfered with promissed labor or

Customer Question
does the labor have to...
Can stock of an s corp be transfered with promissed labor or does the labor have to already been complete?If bylaws of a corporation state "Stocks can only be transferred on the books of the corporation" what is the exact meaning of that.
Submitted: 8 years ago.Category: Business Law
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5/2/2009
Business Lawyer: Maverick, Attorney replied 8 years ago
Maverick
Maverick, Attorney
Category: Business Law
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Experience: 20 years of professional experience
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Whether shares can be issue for promised labor is dependant on the state where you are incorporated. Some states permit this transaction while others do not.

 

With regard to your second question:

 

when such a provion is found in a general incorporation act or in the by-laws of a corporation, it is intended to prescribe a method of transfer which shall be deemed effectual, as between the corporation and its stockholders, in all matters relating to the internal government and management of the corporation, rather than to prescribe a
method of transfer which must be observed as between a stockholder and
third parties.

 

Notwithstanding such a provision in the charter of a corporation, a stockholder thereof may typically divest himself of all beneficial interest in his stock by (1) a written assignment of the same and a delivery of his stock certificate, or by (2) the indorsement and delivery of his stock certificate, or by (3) the delivery of his stock
certificate without indorsement, although no transfer is made on the books of
the corporation.

 

A transfer of his stock in either of the two ways first above indicated, although such transfer is not registered on the corporate books, estops the stockholder from claiming any further title to the stock so transferred, as against subsequent bona fide purchasers thereof for value.

 

In other words the pharse means that it is only a transfer of a right to have new certificates issued upon surrender of the old ones. This way the corporation can keep track of and identify who its current shareholders are.

 

Please click ACCEPT so I can get credit for my work. We can continue our conversation after this at no additional charge

 

 

 

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Customer reply replied 8 years ago
So would it be a legal transfer of stocks on the corporation if a.no payment is made and B.stocks were not transferred on the books of the corporation.stock certificate was issued "in good faith" but no valuable consideration was given
Customer reply replied 8 years ago
my answer was accepted,even though i did not accept it.something screwy is going on here.
Customer reply replied 8 years ago

here are the full details

 

 

My question involves business law in the state of: Kentucky

I need help because my brother is suing me.8 years ago I opened up a company as a dba and 2 years later i turned it into a s-corp with me the sole shareholder in the business.2-05. 2 years after that my brother wanted to come into the company because he didnt like his employment.We verbally agreed that we would form a partnership and we would split future profits.we agreed to other things such as how to handle conflicts etc.we went to an attorney andstarted a rough draft of what we wanted in the agreement and the attorney got sidetracked for 3 or 4 months.we went back to attorney thinking we were going to finalize everything.So i filled out a stock certificate(thinking we were going to complete that day).Attorney told us to take rough draft of aggreement and to make any changes and look over the agreement and come back when we got everything nagotiated.so several months went by and hadnt done that due to being busy, etc.Around thanksgiving 2007 he just has to buy some expensive van around $11,000 that i didnt think we needed,but give in to keep him happy,and that is when all of the problems started.He was given a $5000.00 check and another company van worth $5000.00 when he got all the details out of the way I was supposed to go and sign off on it because he wasnt legally able to do so,(I hadnt let him do anything legal on behalf of company.sign checks,sign legal forms such as taxes,etc)He calls me and tells me that the bank wouldnt cash the $5000.00 check and that he needed me to go to the bank and deposit the money and he would give me the other check back later.No sooner than i did that he calls me and tells me that he needs to be put on the company bank accounts and i tell him that that wouldnt be a problem but we would have to finish our partnership agreement so he would be legally responsible for the company.(If he wasnt legally responsible he could take all money and walk away leaving me responsible).It escalated into,If im not put on the bank accounts then I am leaving.I told him It probably wouldnt take a week to get it all done.That wasnt good enough and it had to be now.(also informed him about going to a mediator and he refused)I didnt do it and he left(I am convinced he would have took all the money if i had.)Come to find out he had started to put the van in his name.I hunted down the car lot and told them that i had to have the $5000.00 van back and he wasnt authorized to trade that van in.he tried to dispute it with the stolen stock certificate that was in the file of all our legal nagotiations.(he stole the file)and anything else he could put his hands on.Some i can prove and some i cant.I finally got the van back but not the $5000.00 check.I went to an attorney and asked for advice and was told there wasnt much i could do other than go after him for the 5000 that was given to him to purchase the van.The attorney told me he could just say he didnt have stock certificate.Basicly I had to wait for him to try something.I put stop payment on check.Company didnt really have a lot of money in the bank because it was constantly paid out.Most of what it did have it owed out in debt.The only valuables it had was tools,equipment inventory etc.(most of which it had when he come in.)Bank balances were virtually the same when he came in as when he left.He never paid any money when he came into the company.I decided not to go after him because I had a lot of other things to worry about and i didnt want to spend money on an attorney,etc.So 13 months go by and not a peep from him.The whole time I am working 100-140 hrs a week to pay off company debt and to sort of scale the business back to a managable size because I had decided it was too much headache for not enough reward.So I get a letter in the mail from some attorney threatining to sue me if i didnt give him "his fair share".That attorney decides not to take his case so he gets another one to.Get another letter that states he wants $75000 so i go get attorney to basicly tell them to take a hike other that $2500.00(attorney advised that maybe they would take it but it was in my best interest,rather than pay him and risk losing).Another 2 months went by and I get slapped with a lawsuit for $125000.00about a week ago.I go to attorney lay out all things I was able to put together to dispute his claims(which is a lot).Alot of his claims i can disprove on paper is what is so odd.He worked at company for about 8 months and was paid the whole time he was there.Also I sent him a 1099 (contract labor form for work he did in the 8 months he was there and im almost positive he filed his taxes with it)Wouldnt he be admitting the work he did there was contract labor?Also if you own stock i think it has to be reported.so if he didnt report any wouldnt that be admitting he didnt have any? Also i am concerned that my attorney is not taking this as seriosly as i am or not working on it as hard as it he should.My stratagy was to try to get the attorney to talk to the other attorney and let him know in a round a bout way that company didnt have a lot of money and that even if he won he wouldnt get much other than equipment that wouldnt sell for a lot.So even if he won he really wouldnt.my last meeting with the attorney he told me he tried to call the attorney and left messages and they did not call him back.That seems odd to me because all info should be good info toi an attorney.Is it possible my attorney didnt make the effort in order to be able to keep the case going so he could get paid?Is it standard practice for attorney to not call me back when i call him?Only way i can talk to him is schedule an appointment?(I can understand not wanting to be bothered all the time by phone calls)HEEEEEEEEEEEEEEEEELP

Business Lawyer: Maverick, Attorney replied 8 years ago

I don't beileve that is legally sufficient. You will need to document a resolution that you have issued stock for future services to be performed for the corporation. Indicate the name of the person who will perform the services, the number of shares the shareholder will receive, adescription of the services or the labor due to the corporation and and the amount due to the corporation based on the fair market value of the services to be performed.

 

Then you will want to attach a schedule showing the expected future dates of completion of protions of the promised services.

 

 

 

 

 

Once these resolutions have been passed then the appropriate corporate officers can issue the stock per the resolution.

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Customer reply replied 8 years ago
take a look at full background and see what you think and i will give bonus
Business Lawyer: Maverick, Attorney replied 8 years ago

I have read what you have just posted. Given the fact that you have a local attorney involved, it is best that you make an appointment with him to get the details hammered out. This site is designed to assist people in a general way and give them some guidance, not actual legal advice on a specific factual scenario. Having said that, to stay on point with your original question that was posted, if you have not issued any shares and documented any resolutions to that effect and he does not have any share certificates, it will be difficult for him to prove that he is a shareholder.

 

If you need to find a reputable local attorney, go to www.martindale.com and type in your zip code and look for a business litigation attorney in your area.

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Business Lawyer: Maverick, Attorney replied 8 years ago
The attorney for your brother appears to be using a lawsuit to intimidate you and extract a settlement from you. He knows that you will have to hire an attorney to defend this matter and thus, you may opt to settle instead of incurring legal fees. Your attorney is probably asking you to make appointments because that's the only way he can feel good about billing you for his time and does not want to give advice over the phone.
Maverick
Maverick, Attorney
Category: Business Law
Satisfied Customers: 6,425
Experience: 20 years of professional experience
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Customer reply replied 8 years ago

If i defended myself would it offend the court or the judge?my attorney cant come up with a worst case of cost so my thought is that i could get blead from both sides.(between a rock and a hard place)he seems to want this in court.If an opposing attorney tried to contact you would you return call and is it standard practice to do so.i dont see any reason not to other than my attorney not making the effort.(I know first hand he is hard to get ahold of.All info of the case(which i think i have a strong case)stratagy and so forth has been my work,i am just basicly delivering it to him for his wording and correct procedure.If i messed up on procedure would the judge just kick it back to me to fix?also would it be a jury trial or judge only.if the two parties are split then who would trump.I am a tireless researcher and fact finder and just dont know at what point do i do it myself.I am not saying that I could do better than attorney,just that it is more important to me than him and i would invest maximum effort.And I dont think he is.Where could i get help with procedure if idid do it myself.The other side seems to be very slopy with the facts that i canb disprove on paper(seems like plaintiff and opposing attorney arent spending much time on this,(going by the law suit)Also does civil suits ever hardly get kicked out in the response phase)Everybody seems to want this in court but me,but i seem to be the only one spending the time on it so far.could you recommend someone to help me with procedure(for a fee of course)if i did do it myself

Business Lawyer: Maverick, Attorney replied 8 years ago

Here are a couple of suggestions:

 

if the other atty calls you, do more listening than talking and try to write down what he said and put a date and a time to it;

 

if he asks you a question, tellhim you will think about it and get back to him;

 

if you mess up on procedure, sometimes it isn't the end of the day and sometimes it is;

 

I would ask for a jury trial because the more you drag this out for the other atty the less likely he is to puruse it since he is probably not getting paid by the hour and since a jury is likely to sympathize with you case;

 

I could help you with porcedure at this site, just submit your questions to me, or you could find a civil litigation solo practitioner in your area who is hungry for work and gives you a discounted rate in your area by going to the site I quoted earlier or to www.lawyers.com

 

a civil suit can be kicked out by the defandant if you can show that there is not issue of fact and based soley upon the law you are entitled to summary judgment against the plaintiff.

 

You could also file a countersuit if you have grounds to do so.

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Customer reply replied 8 years ago
your answer doesnt help me because A.he cant contact me while i have counsil.B I dont need to listen to him because i already know what he wants and C..give me a scinario that my procedure would ruin my case other than the obvious.I do like the part about the summery judgement though.There are a lot of holes in the initial lawsuit so that should be easy to do,so why isnt my attorney attacking that.I am suspicious he is perposly keeping this going to be paid more than he would normally make if he would just follow what we agreed on.he seems to be looking out for his interists and not mine.He told me 2 things that I dont think are truthfull.1 they hardly ever throw out the lawsuit in the initial response phase.2.he made a good effort to contact opposing council and could not get a response.
Business Lawyer: Maverick, Attorney replied 8 years ago
I have answered the original questions that you asked of me. Any information that I have given thereafter has be in a further attempt to assist you without chargining for questions more in depth and braoder in nature then your original two questions. If you want further information you need to post another question and pay for it. Also, the long paragraph that you have put in, needed to be part of your original question set so that an expert looking at your question could have made an initial determination as to whether he wanted to answer that question for the amount posted.
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