What to do if my partner and I started an LLC of which I’m the president and he’s the CFO but we don’t agree on how to run things?
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What to do if my partner and I started an LLC of which I’m the president and he’s the CFO but we don’t agree on how to run things?
The company is still in its infancy he is a co-founder. Verbally he has 13% of the company and I have the rest. We don’t agree on much of the decisions and he doesn’t contribute at all in any aspects. Can I legally terminate him from this LLC, as we don’t have any written contracts or signed agreements?
Asked on September 23, 2015 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
You can fire him as the CFO, since you are the president and also have a controlling interest. However, you cannot eliminate or remove his ownership interest--the 13%--unless you had buy-out agreement or provision, which you apparently do not the problem is, regardless of the control you have over the company, you can't take away another person's property, and his interest is his property. So you can remove him from decision making and run the show yourself, but he'll still be a 13% owner and able to profit in that way if the company profits and there are distributions of profits or if you sell the business. And you have to treat him fairly as a minority owner majority owners have a fiduciary duty to minority owners, which means, for example, that if there are distirbutions, you have to give him his share. Of course, you can pay yourself a salary as President for the work you do, and do not need to give a salary to someone who is not an employee of the LLC.
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