My business partner removed my name from the corporation without my consent or knowledge, what are my options?
Question Details:
My business partner and I started our business about a year. We both a 50% share. Within the first 6 months, we had some business disagreements, then we agreed to sell the business, but he refused to show the financial book when I asked for it. I also found out that he removed my name from the corporation and added his wife as an Officer/Director without my consent or knowledge. Only his name and my were on the original form of the corporation. I don't know how to deal with this situation and how to report them to the authority.
Hello. My name is Natasha Goodarzian and I am an attorney licensed in the Commonwealth of Virginia. I have seen this type of situation before and can only suggest that you to see an attorney ASAP!!! The longer you wait, the harder it may be to seek a remedy. There are various issues that will need to be addressed first including whether you/your partner properly formed the business as a corporation with the State Corporation Commission. In addition, did you execute a Shareholders' Agreement? In addition to that, is your ex-partner still in the state or has he fled, taking all assets with him? These are all questions a competent business attorney should ask you or look into.
From what you indicate here, your ex-business partner is liable based on numerous potential legal theories. He seems to have breached his fiduciary duty, he may have breached a contract, business relations were interferred with by the wife (holding the wife potentially liable), etc. Whether you had a corporation, partnership, or other business entity, no one can deny you the proper share in your business, especially another shareholder/partner. The proper remedy would be to file suit after some proper investigation.
If you have any questions, please do not hesitate to contact me. My office is located in Tysons Corner, Virginia. My office number is (703) 226-3713. Feel free to visit my web site at www.natashalawfirm.com. Good luck and please act quickly!
1) Get a lawyer. If you were both owners of the business--and 50-50 owners at that--your partner as a general matter cannot remove you from the corporation or unilaterally add his wife as an officer and director. The reason I say "general matter" is that people can agree to do funny or atypical things, so alot depends on the operating agreement and other contracts or agreements establishing the business and/or between you. If your partner lacks the authority to do these things, you should be able to sue him, such as for damages (economic losses; especially if he's improperly taking money out) and/or for an injunction, or court order, requiring him to stop doing these activities.
Note: your prefered outcome is probably to come to a negotiated dissolution of the business, while sharing any cash or other assets, or arrange for one of you to buy the other out. An attorney can help you do this.
2) If you believe there has been crime (e.g. embezzlement; criminal fraud), you can report this to the police. However, if there is no crime, then this is probably a civil matter to be resolved between you and your partners, without the authorities involved.
