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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 116818
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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We have a California corporation filed with the state and have

Customer Question

We have a California corporation filed with the state and have a federal employment number. Corporation only has three officers. I am the secretary and Executive Director of the corporation. CEO and I disagree with how we expand our business. Based on that disagreement he moved out more than $ 90k from the business account to an undisclosed account. I have spent every day for the last year working without any salary and invested my retirement money $53,000 in the company. He now claims that he wants to disolve corporation and cancel all outstanding contracts that could generate more than 400K this fiscal year. What are my legal rights?
Submitted: 7 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 7 years ago.
If the officers of a c-corp disagree and they are the three only shareholders then disputes must be settled in accordance with the bylaws of the corporation. This means voting in accordance with those bylaws. If he has moved money from the corporation accounts, then this could be seen as a breach of fiduciary duty to the corporation and the corporation can sue him for that breach of duty as well (this would require an attorney because the corporation must be represented by an attorney and not the owners). Also, in case of dissolution, this would go in accordance with the bylaws as well and if the shareholders/officers cannot agree, the the only recourse is to either buyout the party or proceed to court to have the court decide on the dissolution.

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Customer: replied 7 years ago.
Thank you for your response. Do you know if Bylaws are filed with the State Attorney General? I feel foolish in asking, but eventhough I am the secretary, he has not given me a copy of filed bylaws. What about my investmnet? Under the law is it treated differntly because it was my retirement money?
Expert:  Law Educator, Esq. replied 7 years ago.
The bylaws are not filed with the secretary of state, they are part of the corporate documents and if they will not provide them then you would have to sue to get them. Business investments are risks, so you would have to seek the recovery from the company and if they will not buy you out then you could sue for a buyout, but the court will treat the money you put in no differently just because it is retirement money.

The bylaws are supposed to be kept in the corporate records. If not, you need to make written demand on all of the officers for a copy and if they refuse to supply, then again, off to court is your only recourse.
Customer: replied 7 years ago.
Thank you!
Expert:  Law Educator, Esq. replied 7 years ago.
Thank you. Good luck.