I own 50% and am VP of a S corp business that my father left me when he passed way. My older brother owns 25% and is Pres. and my sister owns 25%. The problem is I am being run over. My brother started his own business that he is running out of our business. He is doing the jobs through his company that our company should do. Him and his wife totally control the finances in both companies. They wheel and deal the money and the contracts to benefit them and there business His co. is making all the money and the family co. is struggling. I don't know what to do. what rights do I have owning 50%
2 Answers from Attorneys
Your rights are going to be determined by the operating agreement/articles of organization. If there is no agreement then it will be based on Maryland State Law. Your percentage in the business may provide you with some rights depending on what your operating agreement says. Additionally you have to be really cautious about the secondary business your brother is running through the family business. There may be a breach of fiduciary duty occurring and his business may be creating liability for the family business. Without consulting with you about the specifics of your situation I could not give you a definite answer. Feel free to contact our office as we represent clients on business issues in Maryland.
In Maryland, if you do not have a written Operating Agreement, then the Maryland Code says what right you have, and what obligations the others have to both the corporate entity and to you, as a shareholder. And in your capacity as a 50% owners and officer, you have obligations to investigate what is going on, and perhaps to demand an accounting. The others may be "usurping corporate opportunities" and diverting assets and business. We are in the middle of several lawsuits involving facts like you describe. You must seek out advice, and share all details with an attorney of your choice.
Related Questions & Answers
Is it legal to make a IPTV service and provide others with it? Asked 1/03/14, 4:10 pm in United States Maryland Business Law
By law, can a employer make an employee work more than 16 hrs in one shift? Asked 12/19/13, 12:53 am in United States Maryland Business Law
Arthur wrote to his sister Mary: If you will name your next child after me, I will... Asked 11/23/13, 4:30 pm in United States Maryland Business Law
I am starting a greeting card business. I want to make my own envelopes that have a... Asked 11/03/13, 6:48 pm in United States Maryland Business Law