Legal Question in Business Law in Maryland
Shareholder obligations to legal fees
A corporation has been formed and shares have been issued to individuals that have not participated in company affairs (they did not earn them). There is a lawsuit pending and the majority shareholders would like everyone to participate in the legal costs. Is there a document to make this mandatory to participate in the costs and should you NOT participate the shareholder would have to forfeit the amount in stock back to the company or to the shareholder that would pay the costs assoicated with this lawsuit??
1 Answer from Attorneys
Re: Shareholder obligations to legal fees
It is the corporation, not the shareholders, which is liable for legal costs arising from a lawsuit involving the corporation.
No shareholder can be assessed for any expense of the corporation, and that includes minority shareholders.
It matters not how they acquired their shares.
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