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I have a 50/50 business partner and things are not going…

I have a 50/50 business...
I have a 50/50 business partner and things are not going well. We have not officially launched but incorporated in January.
He said he would funds the start-up and I was to handle day-to-day and brought the expertise.
I guess he "loaned" the money to our company form his other company (around $11k).
I want out and offered to buy him out at the total amount we have owing as we have no revenue.
What are my options if I wan't out. Am I responsible for half of this "loan"??
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Answered in 6 minutes by:
3/16/2018
Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 104,005
Experience: Lawyer
Verified

Hello! My name is Debra (formerly known as Legal Ease). Thank you for your question. I'm reviewing it now, and will post back again shortly.

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I am sorry to hear this.

Do you have a partnership contract?

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Customer reply replied 1 month ago
There is a shareholder agreement.

What does it say about buy outs? For example, is there a shotgun clause?

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Customer reply replied 1 month ago
There is no shotgun clause. Was done to protect me because I have limited resources and he is a millionaire.
He also just confirmed for me that on Sunday he would layout all three options we currently have. Buy-outs on either side or continue.

If he made a loan to the corporation then you don't owe him any money. The corporation does.

But if you buy him out you would end up owning a corporation that has this debt.

If you don't want to continue then it may make the most sense to let him buy you out. If he wants you gone and has a lot of money he may be willing to pay you more than you would think.

So on Sunday perhaps go in knowing what you are willing to settle for in terms of a buyout but also hear what he has to say, indicate you will give it some thought and get back to him shortly and perhaps mention you will likely get some legal advice before deciding.

Does that make sense?

Please feel free to post back with any follow-up questions you may have. If you don't have any then I hope I have earned a 5 star rating but if you don't feel that I have please don't hesitate to reply back and let me know what more I can do to assist you. Finally, please know that even after you rate me I will be here for you and you can ask follow-up questions if you think of them later on at no further charge of course.

Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 104,005
Experience: Lawyer
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Debra and 87 other Canada Law Specialists are ready to help you
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Customer reply replied 1 month ago
I have a meeting at noon today. They business partner offered to buy me out. If I go this route, is there anythign I need to look out for or to ensure I do myself?

Yes

You need an agreement in writing. It has to have all you want in it and has to provide you with an indemnity clause so that you are not liable for anything the business does going forward.

It would not make sense to sign this without having your own lawyer review it.

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Customer reply replied 1 month ago
How long does this usually take to complete? If we make a verbal agreement today, how long until the paperwork could be completed (generally)?

It depends on how busy the person's lawyer is but normally it is done very quickly so no one changes their mind as they cannot of course but some try to and then they end up in court.

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Customer reply replied 1 month ago
Ok thank you for your help. Last thing, it was recommended that I record our conversation when we meet. Is that allowed?

It is allowed but it's up to you whether you record it. It doesn't really matter.

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Customer reply replied 1 month ago
Ok. Thank you.

Bye for now.

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