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Can my ownership in my company that I own 45% of the shares…

Customer Question
Can my ownership in...

Can my ownership in my company that I own 45% of the shares be stripped if the company if suffering financially and my partners have money to put in and I do not?

Lawyer's Assistant: Because laws vary from state to state, can you tell me where the company is registered?

Wisconsin

Lawyer's Assistant: Has anything been officially filed? If so, what?

Not yet. They are in the midst of drawing up paperwork.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Not at this time.

Submitted: 28 days ago.Category: Legal
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Answered in 1 hour by:
3/24/2018
Lawyer: Attorney Wendy, Lawyer replied 28 days ago
Attorney Wendy
Category: Legal
Satisfied Customers: 491
Experience: Member at Keefer & Keefer LLC
Verified

Hello. My name is ***** ***** I am an attorney. If you can tell me what type of entity the business/company is (corporation, S-corporation, LLC, partnership) I can provide a more thorough response.

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Customer reply replied 28 days ago
S corp
Lawyer: Attorney Wendy, Lawyer replied 28 days ago

Thank you. I am working on a response for you now and should have that to you shortly.

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Lawyer: Attorney Wendy, Lawyer replied 28 days ago

Whether you can be removed as a shareholder for failure to provide a capital contribution is dependent on many things. First, in S-corporations, the shareholders can make a capital call in which all shareholders are requested to contribute capital - usually cash - to aid the business. Whether this company can make capital calls and under what circumstances should be set out in the company's bylaws and/or shareholder agreements. It is also in these agreements that some ways to remove shareholders - including involuntary removals - should be spelled out. So the first thing you may want to do is review any of these agreements and documents, which should spell out many of your rights and the the rights of the company and the other shareholders. There should be a provision allowing calls for capital in the governing documents of the company; otherwise, it is not proper to require such contributions; there could also have been a required capital contribution at the outset that resulted in your original shareholdings. When a capital call is properly made, the failure of one shareholder to provide that capital can result in the other shareholders, who do contribute, gaining additional percentage ownership while the shareholder who did not contribute would have his percentage of shares reduced.

So, in your case, it may worth consulting your accountant, particularly if you already have one, to review the company and your books to see what would happen to your percentage ownership if a proper capital call has been made (not just a voluntary contribution by others) and you can not contribute.

If you need further assistance, please reply to this email. If I answered your question and provided excellent service, I would greatly appreciate your 5 star rating at this time.

Please note: This information is ​for educational purposes only and is not legal advice. No course of action is being proposed and no attorney-client relationship or privilege has been formed as a result of this conversation.

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The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

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