If a partner commits fraud can he be forced out of the partnership and removed from all corporation documents?

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If a partner commits fraud can he be forced out of the partnership and removed from all corporation documents?

Our partner stole money for his personal use from a credit card. Can the other 2 partners remove him from the partnership in any way or must we dissolve the corporation in order to get him off. Don’t want to close as much money is vested in company.

Asked on April 10, 2012 under Business Law, Delaware

Answers:

Glenn M. Lyon, Esq. / MacGregor Lyon, LLC.

Answered 9 years ago | Contributor

Unless there is a company agreement in place that allows you to remove your partner, you cannot do so.  However, you do have the option to sue the partner and/or ask for a judicial dissolution.  Likewise, if you have the authority, you might be able to dissolve the company and start a new one without him.

Brenda Feigen / Feigen Law Group

Answered 9 years ago | Contributor

You seem to be using the words "partner" and "corporation" interchangeably.  No matter what it is, you should get rid of the person who's committed fraud.  The other two partners should remove him and file whatever you need to with the state to clarify who the principals are.  If it's a corporation the same concept applies.  It is wrong and financially irresponsible to maintain a relationship with someone who has committed fraud.  You would certainly be within your rights to file criminal, as well as civil, charges against him.  You may contact me at 310-271-0606 for more -- or email back.  Best, Brenda Feigen


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