My family (shareholders of a private company) are requesting the company to execute a stock repurchase. However, the problem is the CEO has disappeared, or fled to another state due to an impending lawsuit filed by my family. The lawsuit was filed by my family on the basis of security fraud and breach of fiduciary duties. The CFO has agreed to execute the stock repurchase, but we are concerned that if CFO has the legal right to do so. What kind of legal process should we take to execute the stock repurchase without violating any law?
2 Answers from Attorneys
You might want to consider an judicial dissolution, then reincorporate. Or a derivative action? Maybe just fine the best way to oust the CFO (which is it: CFO or CEO?). These can get goofy - I suggest contact the attorney that drafted your corporate docs as it is common to anticipate these type of situations. In fact: whoever is handling your lawsuit should be the one your asking about this. The rest of us have NO IDEA what your docs specify or the particulars. These are generally pure minutia.
If your corporate governance permits and if you have the votes to do it, you can call a shareholders & directors' meeting, elect new officers and directors and make any other necessary changes in the bylaws and/or Articles and then take care of business. Without knowing exactly what your corporate governance rules and procedures look like, or exactly the relief sought and status of your lawsuit, which is referred to as both "impending" and also " as filed", Whatever its status and what it seeks, it certainly needs to be taken into consideration. Its not possible to plan strategy without full knowledge of the facts and your query does not provide full information.
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