Legal Question in Business Law in Indiana

Not paying out stock distributions

I work for a family owned business which is setup as an S Corporation. I own roughly 10% of the company stock and each year the president of the company, major stock holder and subsequently my father takes a large distribution of company profits. I on the other hand recieve zero distributions my questions are 1. Is this legal? 2. How do I find rectify the situation? I realize some of you may state that it is your father work it out I wish it were that simple we have a horrible relationship I should say strictly employer employee.


Asked on 10/23/06, 4:45 pm

2 Answers from Attorneys
Burton Padove Indiana and Illinois Lawyer, Burton A. Padove

Re: Not paying out stock distributions

You can sue for an accounting.

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Answered on 10/23/06, 6:31 pm
C. David DuMond Law Offices of David DuMond

Re: Not paying out stock distributions

This is very fact-sensitive issue, so you need to confer with a real lawyer who has experience in corporation law and shareholder rights. If possible, obtain copies of the articles of incorporation, the by-laws, and any buy-sell agreements to show the lawyer. Take any tax forms pertaining to distributions from the company. Also be prepared to discuss the terms of your employment agreement with this company. Minority shareholders are given some protection, but they are generally despised in fact and law. However if the majority shareholder paid out what were in effect stock dividends to himself but not to the other shareholders, then you could have a claim for redress. You may be able to force the company into receivership and demand an accounting. That would give Dad something to think about. Good luck.

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Answered on 10/23/06, 9:41 pm


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