Legal Question in Business Law in Michigan

Re: Partership Dispute

I'm unclear, is this a corporation, LLC, or partnership? Regardless, it sounds like you and your "partner" have been cutting corners on the formalities of the business. A corporation requires bylaws, a LLC requires an operating agreement, and both require that an annual meeting be held with elections and minutes be generated. A partnership requires a partnership agreement. If there is confusion between you and your "partner" regarding your rights and responsibilities in the business, it is probably because you have neglected the abovementioned formalities. I suggest you have an attorney review all the business records. If they are being neglected, you should rectify the situation. This matter should be handled immediately before there is a falling out between you and your "partner." For more info, please contact my office at (248)851-3171.

Re: Partership Dispute

This sounds like a very tenuous position without a formal partnership agreement. The question is whether this is really a partnership or a corporation. Shares are usually only issued if there is a corporation and it is probably closely held. Without any further information I cannot give good advice except to contact a business attorney in the state of Michigan who can help you sort this out. These things are never easy nor cheap. Therefore you may have to consider this before any attempts to dissolve a partnership or to dissolve a corporation. One thing to check is whether there are any filings with the Secretary of State for a corporate formation.

Good luck!!

Re: Partership Dispute

If it's a corporation, it's not a partnership. If it's a partnership, it's not a corporation. So clearly there is ample confusion here. And it seems likely an attorney was not involved in the formation; if one had been, there would be proper formation documents spelling out the answers to your questions. And it would also likely have been cheaper than the business attorney you now need to sort out this dispute. Contact a business attorney and take/send copies of all of your documentation to him/her for review. With the information you provided, it is impossible to determine whether a partnership or corporation is at issue.

http://www.incorporatecalifornia.com

Re: Partership Dispute

The first step is to determine whether the company is a partnership or a corporation. A corporation must be filed with the State to exist. A corporate filing can be verified by contacting the Michigan Department of Labor and Economic Growth, at 517.241.6470. Provide them the name of the company, as it appears on the stock certificate, and ask whether Articles of Incorporation (for a corporation)have been filed for that company or for a company with a similar name. Also ask for the name, address, and phone number for the resident agent of the corporation, if the corporation exists.

If it is a corporation, it is possible that the existence of the share certificates will be enough to evidence the respective interests of the shareholders, depending upon the information provided in the certificates. Michigan corporation law does not require shareholder agreements, but they are helpful to indicate the respective rights and obligations of the shareholders and the restrictions and conditions on the stock. In the absence of an agreement, the Corporation Act governs the shareholders and the stock certificates. In any event, it will be necessary for an attorney to review the relevant information and documents, if any, and advise the shareholder.

If it is not a corporation, then it likely would be considered a partnership. In a partnership, the partners share in both the revenues and expenses in accordance with their respective interests. If a formal partnership agreement exists, then that document will govern the parties' interests, other than as provided by law. In the absence of a formal agreement, the law recognizes a "de facto" partnership, or a partnership which exists by virtue of the parties acting as partners. A stock certificate applies only to a corporation; however, if a stock certificate was used erroneously to designate a partnership interest, then a court of law could consider that as evidence of the respective partnership interests of the holders of the certificates. It is impossible to predict what might happen in a court of law, and the particular facts and circumstances will affect the outcome of a lawsuit to determine partnership interests.

This response is not intended as legal advice. Your rights and obligations will depend upon the particular facts and circumstances affecting this matter. You should consult an attorney in your area to discuss all of the relevant facts and circumstances. No attorney/client relationship is created as a result of this response. I may be contacted at 248.788.8225.