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HI I have a corp question.. we formed a corp llc with 4 equal…

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HI I have a corp...
HI I have a corp question.. we formed a corp llc with 4 equal members, no managing partner or corporate contract. We were advised not to form a corp with out a clearly defined leader. So now we have conflicts on all sides with no one making decisions and some threating to withdraw their contributions to the corp.
What is our best solution to remove members that are causing instability within the company and threatening the livelyhood of the partners. Of course anyone can leave at anytime, but do corp laws provide any protection for the remaining partners. Are contributions to the corp considered corp property?

any advice in this situation?
Submitted: 8 years ago.Category: Business Law
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Answered in 1 minute by:
6/24/2010
Business Lawyer: Infolawyer, Attorney replied 8 years ago
Infolawyer
Infolawyer, Attorney
Category: Business Law
Satisfied Customers: 63,673
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Hello and thank you for your question. Normally you need majority vote for decisions/votes. If each have equal shares, can consider dissolving the corporation or buying a shareholder out. The shareholder does not lose his contrbution and cannot be forced to forfeit it.
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Customer reply replied 8 years ago

Hi.. the dissolving of the corp would not be a good options as the company has been operating for several years and has invested hunderds of thousands of dollars on advertising, licencing, equipment and intelectual property. The corp depends on each member to perform the various functions in which each is an expert.

 

I know this seems petty but two partners are threatening to leave if the control of the company is not turned completely over to them. Each individual can be replaced if given proper notice and time, but a threat of this sort seems illegal, some how. Do the remaining 2 partners have any right to move forward to replace or re-inforce the resources to protect their company, recriut alternates, make corp decisions in order to protect the company, without a majority vote?

 

and also if a partner leaves what steps must be taken to amend the LLC ?

Business Lawyer: Infolawyer, Attorney replied 8 years ago
They cannot just leave but would need either to sell their shares, seek to buy yours, or else dissolve the entity. You may want to negotiate giving them control in exchange for money or else negotiated shared control. If this is an LLC, any such changes would require changing the operating agreement.
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Customer reply replied 8 years ago

What would prevent the partners from just leaving and letting the business fail.. is that against the law.. ? or, lets say worst case scenario, they clean out the bank and email all your customers .. its not likely but I would like your opinion on what my rights are, what my actions should be in such a case..

 

anything information you can elaborate on would be helpful..

 

What is the operating agreement.. was that filed with the state when the llc was recorded?

 

thanks

Business Lawyer: Infolawyer, Attorney replied 8 years ago
They could do so in theory but then could be sued for breach of fiduciary duty. Normally what happens is the entity dissolves or certain members buy out the others.
Infolawyer
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Customer reply replied 8 years ago
So, if we disolve the LLC can we still retain the same name for our DBA? Just create another LLC entity?
Business Lawyer: Infolawyer, Attorney replied 8 years ago
That is correct
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