If a board member and equity shareholder divulges our business plan/model to direct competitor, can we kick him off the board and take back the equity?
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If a board member and equity shareholder divulges our business plan/model to direct competitor, can we kick him off the board and take back the equity?
We have a shareholder that sits on the our board of directors recently decided he didn’t like the new direction of the company. So he picked up the phone and called our direct competitor and let them know what were are up to. He has damaged the company beyond calculation.
Asked on November 6, 2011 under Business Law, Florida
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The best way to answer the question you have asked is to carefully read the bylaws of your presumed corporation as to duties owed by members of the board to the corporation. From what you have written, it seems as though the board member breached a fiduciary duty to the corporation and its shareholders warranting the board member to lose his or her position as a director/board member.
As to unilaterally taking back the board member's equity in the corporation, that cannot be done. A lawsuit first needs to be filed against the board member if warranted and if there is a judgment against him or her, the equity that the board member holds can be levied upon. I suggest that you consult with a business attorney about your situation involving the disgruntled board member.
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