My jurisdiction is: New York State
I am a 45% shareholder of a S-Corp along with 2 other shareholders. The common stock is divided 45%, 45%, 10%. The 3 of us plus our CFO sit on the Board of Directors. For the last 10 months the other 45% owner (Mr. Y) has begun to conduct himself in a number of very strange fashions. He has:
a) Asked for a substantial dividend payout (far above anything we could afford)
Has he clearly violated his fiduciary and duty of loyalty requirements?
I am a 45% shareholder of a S-Corp along with 2 other shareholders. The common stock is divided 45%, 45%, 10%. The 3 of us plus our CFO sit on the Board of Directors. For the last 10 months the other 45% owner (Mr. Y) has begun to conduct himself in a number of very strange fashions. He has:
a) Asked for a substantial dividend payout (far above anything we could afford)
- He tasked our financial department to produce a number of spreadsheets in an attempt to justify the large payout. He did this without the knowledge of our CFO.
- He has used every excuse from "I haven't read the policy yet" to "What does the word perceived mean?"
- The "perceived" question cost us $450/hour to answer because he insisted that he talk directly with one of the corporate lawyers
- Other tactics include showing up late to the meetings and leaving early
- Recently, he stated that he didn't need to follow one of the Board's directives because he "didn't agree to that".
- He tasked the financial department (again without the CFO's knowledge) to make a number of phone calls to one of our regulation agencies determine what the maximum allowable pay rate he could be with his title.
- To add insult to injury, he has almost completely ignored all his duties as described with his job title.
- This has been an ongoing battle. 20 minute meetings turn into 2 - 4 hour meetings as we wait for him to read the material.
- You don't even want to know what he's been asking for...
- Additionally, recently we found out that he made a purchase for some computer equipment without management/board approval. We've also recently busted him stealing printer cartridges.
- We initially said that we would allow him to conduct the work provided that we own the IP and the other corporation contracts his services through us.
- His latest zinger is that he developed all the data/rights/IP under the other corporation
Has he clearly violated his fiduciary and duty of loyalty requirements?