What happens when minority owner’s of a corporation disagree with the majority owners regarding business matters should be handled?

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What happens when minority owner’s of a corporation disagree with the majority owners regarding business matters should be handled?

I am currently 5% owner of a company, there are four owners all together. Another owner who holds 10% and myself want to press charges on an employee who has stole $60,000 from us. Buying stuff on our eBay account, refunding money to her debit card from our credit card machine and moving funds from our business paypal account to her personal account. The problem is the other 2 owner don’t want to press charges because she has a kid.

Asked on January 15, 2015 under Business Law, Kansas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

While minority owners cannot be "oppressed" by majority owners--that is, the majority owners cannot deny them a share of any profits from the business, or otherwise prevent them from getting the fair value of their investment (to the extent it has value)--they cannot overrule management decisions of the majority which do not oppress them. This is a non-oppressive management decision: it has nothing to do with your rights as a minority owner, since whether or not charges are pressed has nothing to do with the value of your investment. It's a decision legitimately within the discretion of the majority--a bad decision, in my opinion, but nonetheles a legitimate one.

That said, you are free to act as an individual, even if not as a controller or manager of the company. You could, as a person aware of a crime, inform the authorities (police) of what happened. The police may or not act, if the majority owners and the company tell them they don't want charges pressed, and it could complicate your relationship with the majority owners, but you do have the right, as an individual, to report the crime.

Where your minority rights could be implicated would be if the majority owners are allowing her to steal, and so take money from you (you own 5% of whatever was stolen) because of a personal (e.g. romantic or familial) relationship, or because she's given them part of what she stole; in those cases, they are violating their fiduciary obligation to the minority owners. If you think this is the case, you should consult with an attorney.


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