Legal Question in Business Law in Ohio

I own 50% share of an s-corporation. I am also the CEO/CFO/COO according to the articles of incorporation. After a dispute over the finances, my business partner (who owns the other 50%) demanded that I no longer do anything for the company or be on any bank accounts. Within 24 hours my name had been removed from all accounts and materials, and my business email passwords had been changed so I did not have access to them. Also, the new COO (not an owner) asserted their demands that I return the company car, and other items purchased by the company. The vehicle was leased under the company's name, with the acting CFO (also not an owner) signing for financial responsibility. I did return the car and a computer, but have not returned anything else. They have now threatened me with legal action, and also with alerting the media to make my week "very difficult". My question is did they have the right to do any of this? Do I have the right to continue to hold onto these items? Do I have any recourse against them? thank you for your time,


Asked on 4/03/11, 1:24 pm

2 Answers from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I can say the following. It appears your "business partner" may have acted impromperly. Since neither of you own a controlling interest (at 50-50 each), neither has the right to make controlling decisions, including the replacement of key officers. Of course the corporate bylaws or shareholders agreement may have altered this result, so these need to be reviewed and considered against the background of what's happened. This is not something that can be adequately addressed on a bulletin board like this. You should consult with a good business or franchise attorney in your area for a review of everything and for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 4/03/11, 1:44 pm
Bradley Miller Miller Law LLC

The Articles of Incorporation is merely the document that 1) creates the corporation in the eyes of the state, and 2) lists the statutory agent. It does not control how the corporation is run. In a corporation, the rules for how the organization will usually be run will be found in the bylaws or a shareholder agreement. This includes voting rights.

If you have a set of bylaws or shareholder agreement, then the rules in there will tell you whether the other owner had the ability to make any of the changes you described. If there are no bylaws, then the default statutory rules will apply. In that case, then generally speaking you need to have a majority vote to make decisions. If both of you had a 50% ownership interest in the company, then you would both need to agree on any decision made.

You may then have recourse against your business partner. You should find a business attorney right away who can review your situation in more detail and advice you of the best course of action, including taking your own legal action if necessary.

If you have any questions, feel free to contact me.

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Answered on 4/03/11, 1:57 pm


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