My husband and his father started a ground lease bill board company and brought in a business partner later. The father died two years ago and wrote up that the business partner received one extra share in the company (than combined of what was left to his wife and is son) in hopes that he would run the company efficiently to accomodate his wife and his son financially. The business partner, has a side company of his own and started puting new business in to his own company and basically running our family company in to the ground with intent and malice. According to the business partner, because he has one extra share in the company, he can do what he wants. My husband started this company 15 years ago on his own, his dad came in later and than invited, whom he thought was his best friend in to it. Can this business partner, now that the dad is gone, legally run the company in to the ground and force us to sell out due to financial hardships??? We have proof of his taking business away from our company and puting in to his, as well as he lowering our salary and increasing his. Obviously, morally, it is an awful situation, but I shudder to think that just (1) extra share, legally gives him the right to do this.
Answered on: 5/18/10, 8:59 am by Edmund Burke
The business partner does not have the complete freedom to do what he wants, simply because he is a majority owner. As a majority stockholder, board of directors member (I assume) and officer of the Company, he has a fiduciary duty to the corporation, and must take care to run the Company for the benefit of all shareholders.
It is ironic that he thinks his majority control gives him carte blanche. In fact, the law is the opposite: because of his status, he must take care to protect the rights of all shareholders, including the minority. While reasonable business decisions are within his control, that does not mean he has the right to abuse his power for his own selfish ends. Quite the contrary.
Siphoning away business from the Company to his own, personal company, and doing it with the intent of destroying the Company, is a violation of his duties to the Company. You also have a case with good moral (and jury) appeal. Email or call me if you would like to discuss this matter as it seems like a fairly clear abuse of his majority power.
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Edmund B Burke, Attorney at Law 426 Capri Dr Hartwell, GA 30643► Other answers from this attorney