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We formed a C Corp in NYC in June 2016 and verbally agreed

Hi , we formed a...
Hi , we formed a C Corp in NYC in June 2016 and verbally agreed to 60 40 shareholding where I am the one holding 60 %. We both draw salaries but my other partner doesn't put his full hours into work and I am the doing everything. I would like to amicably end this partnership and would like to buy out his share. We don't have any written bylaws, partnership agreement or an operating agreement. What can I do if the other partner doesn't want to go or if he tries to buy out my share? Thanks.
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Answered in 1 hour by:
1/10/2017
Asad Rahman
Asad Rahman, Attorney
Category: Business Law
Satisfied Customers: 2,197
Experience: Practicing Attorney with 10 years experience
Verified

Are you incorporated in New york as well?

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Customer reply replied 10 months ago
Ours is a corporation Incorporated in the state of New York

Bear with me while I do a little research.

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So in the absence of company bylaws then this statute sort of fills in the gaps and acts as your bylaws. http://codes.findlaw.com/ny/business-corporation-law/#!tid=NF98FFA8C4B984D4F917A55210E14789C

To answer your question Take a look at article 10. It is very basic that you as a majority shareholder can vote to terminate the company but you have to pay the shareholder after all expenses are addressed.

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I hope this helps.

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Customer reply replied 10 months ago
Hi Asad,Thanks for your reply but it isn't very clear to me. I would not like to terminate the company or dissolve it. I would just like to acquire his total share so that he may leave the company. Now as asked before, can I acquire his 40% even if he is not ready to sell his share to me? So in such a case where I being a 60% shareholder and he being a 40%, what happens when a majority shareholder wants to buyout a minority shareholder in absence of any written agreements or bylaws?

Sorry I misunderstood when you said you want to amicably end the partnership. You cannot force a minority shareholder unless your bylaws are explicit in allowing it and you do not have by laws. It has to be by agreement unfortunately.

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Let me know if you have any other questions otherwise a positive rating of 5 stars would be greatly appreciated.

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One idea would be to enact bylaws that have a buy out provision based on the vote of a majority.

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Customer reply replied 10 months ago
Thanks. So in a situation like ours, where no bylaws or an agreement exists,what will be the basis for us or the courts to decide who keeps the business, if both of us want to run it?

Your injunction is not asking for the judge to decide this. You're asking him to order them to comply with the arbitration procedures in your bylaws. Arbitrator would decide the outcome of your dispute.

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Customer reply replied 10 months ago
Thanks for your prompt replies. As I mentioned we have no written bylaws. So in this case where no bylaws exist or where no kind of written agreement exists, on what basis will it be decided who keeps the company?

Most likely he would order mediation so that you guys could settle or he would dissolve the company and simply divide any assets by your ownership percentages

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Let me know if you have any additional questions otherwise a positive rating would be greatly appreciated.

Asad Rahman
Asad Rahman, Attorney
Category: Business Law
Satisfied Customers: 2,197
Experience: Practicing Attorney with 10 years experience
Verified
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Asad Rahman
Asad Rahman
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Category: Business Law
Satisfied Customers: 2,197
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