Minority shareholder wont sign a contract for a new purchase, what do we do?

UPDATED: Oct 1, 2022

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Minority shareholder wont sign a contract for a new purchase, what do we do?

My wife and I own 60 of a business, another
person owns 40. We had to make a purchase
and our finance company approved us but our
partner wont sign the contract. Without this
purchase our company is in jeopardy.

Asked on March 14, 2018 under Business Law, Missouri


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If the company is an LLC or a corporation, you don't need his signature or approval for the company to make the purchase: the majority owners of a corporation or LLC can make decisions for the company and have the company buy something or sign a loan/financing agreement even if the minority of ownership disagrees.
However, you cannot make another person personally obligate himself to a loan or debt, even if he is an owner of the business: there is no legal right to force another to take on debt. So if the financing company requires a personal guaranty from all owners, or if you are a partnership and you want or the financing company requires all owners to sign the contract (rather than just you and your wife), he is well within his rights to refuse.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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