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Business Partners Holding My Equity

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  • 02-14-2010, 01:42 AM
    sao
    Business Partners Holding My Equity
    My question involves business law in the state of: CA

    I am a minority owner in a California S Corp. 8 months ago, I left their employment and am no longer actively involved. We negotiated for months to arrive at a buyout price. My partners now claim they do not have to buy me out at all because a shareholder departure is not explicitly listed as a sale triggering event under the shareholders' agreement. The SA does state that "a material consideration in the execution of this agreement is the promise of each shareholder to devote their full time efforts to the business." (listed under paragraph titled "Triggering Events Requiring Purchase and Sale of Stock).

    I'm not worried about an unfair valuation but do need to get my equity out. By their logic, a terminated shareholder would not be entitled to redeem their shares, either. Can they retain my equity indefinitely if I do not agree to their lowball offers?
  • 02-15-2010, 04:32 PM
    Mr. Knowitall
    Re: Business Partners Holding My Equity
    That really is a matter of contract. I suggest having your shareholder's agreement reviewed by a business lawyer.
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