What to do if I recently formed an S-corp with a friend but found he was not pulling his weight so decided that I no longer wanted to be in business with him?

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What to do if I recently formed an S-corp with a friend but found he was not pulling his weight so decided that I no longer wanted to be in business with him?

We were a 50/50 partnership but due to various reasons found myself paying all fees for trademarks, etc. I said that I would give him the option of buying my shares (covering all I invested since we had yet to do any actual business in the market) would be fair. Also, that if he did not want the business I would keep it and move forward. He agreed verbally to keep it but has yet to meet me to get paperwork started or pay me a dime towards it. This has now been almost 6 months. How can I move forward either way to keep it or get my money?

Asked on May 27, 2013 under Business Law, New York

Answers:

Nathan Wagner / Law Office of Nathan Wagner

Answered 9 years ago | Contributor

You could prepare the paperwork (essentially, you need a purchase agreement, a Bill of Sale transferring the stock, and shareholder and director resolutions appointing new company leadership). But you can't force him to sign the paperwork or pay you for your shares.

You should also take a look at your Articles of Incorporation, By-Laws, and Shareholder Agreement. They probably provide a procedure for dissolving the corporation and/or distributing its assets. They may even provide for buying out another shareholder.


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