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  1. #1
    Join Date
    Nov 2010
    Posts
    4

    Default How to Terminate Corp. Officer, Minority Shareholder from Corp

    My question involves business law in the state of: NV/CA
    I have a minority shareholder(23%) that has been misusing his corporate credit card. I wish to remove him from his position. He is listed as a 23% owner in the corp, one other partner is listed at 23% also. I am listed at 54% ownership. He made no financial contributions to the start-up/formation of the corp. No shares have ever been issued to him. How do I go about terminating his employment, and removing him as an officer?

  2. #2
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: How to Terminate Corp. Officer(Vp), Minority Shareholder from Corp

    If he owns no shares in the corporation, how does he have 23% ownership? Or are you saying that 23% of the shares were authorized but never issued?

    You can dismiss him as an employee and officer by convening a meeting of the board and voting to terminate him. The ownership issue, and what compensation you might have to provide for his 23% is murky because of the discrepency between the ownership you are stating and the lack of any shares to be repurchased. Your corporate bylaws and any operating agreements should address how to deal with this, hopefully.

  3. #3
    Join Date
    Nov 2010
    Posts
    4

    Default Re: How to Terminate Corp. Officer(Vp), Minority Shareholder from Corp

    by-laws actually never done. could never get him to commit and do it. guy is as irresponsible as they come. Fired today. Ownership was given as gift for knowledge base and skill set involving construction, along with promises to do all he could to make company a success. He actually got very mad at me for having business cards printed that had both our names and contact numbers on them. At one time i was told that his job was to show up at the job-site with materials already there, and for him to do the work. i emphatically told right there and then he could go do his own thing then because the company needed someone that was going to help it grow, not hinder it. Stock of 24% was never legally authorized, never issued, and was only to be issued if/when company became profitable. I talked to my personal attorney today, his partner, who is a business attorney whom we consulted with at time of start-up, flat out knows what he has done is illegal, involves several felonies, on the state and federal level, and has opened us up to be audited financially by the IRS. He has screwed up so bad, i have been told to expect the corporate veil to be pierced at time of tax season. Thank god my CPA has a former IRS agent as her tax person.

    he was fired today via text message. Official termination letter and statement of demand for restitution was sent this evening. My personal lawyer, who is in practice with my business lawyer flat out told me he is screwed if i decide to take it to the county DA, and the IRS. He actually advised that I do so immediately, then backed off, and suggested a statement of demand for restitution to the corporation. his 24% ownership was to be a gift based on the company becoming profitable and successful, based in part on his efforts. shares have been authorized for distribution, however never issued, it was agreed no stock would be issued to anyone until the corporation was profitable, or out of debt and breaking even. I convened a telephone call with the other 24% owner/board member, we together decided to fire him, i then had our no %/no share board member what was going on and she was in agreement also. We have teechnically been unable to conduct any business over $500 materials/labor combined due to ca licensing laws. However by law we can work for an owner/builder al lwe want as employees, which has happened. we are in a world of crap, and I have allowed it to go on to long. I expect to be held fully accountable for the corporate by-laws, operating agreements, etc, etc, not being done.

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