Corporate Law Shareholder funny business

[malverde]

In the last day I have found out that my business partner has been meeting with another individual (a person that we work directly with at one of our customers) to start up a competing business.

There are 3 shareholders of "our" company; 45%, 45%, 10% shares. We each have a position on the Board of Directors along with our Treasurer (an outside accountant hired to watch the books). My business partner approached the 10% owner asking him how much he'd charge for 6% of the company - allowing him to have a controlling 51% of the shares. It appears he wants to get his hands on a controlling share of the company so that the new company he is forming will be able to tap into "our" employee pool.

I (or the company) could try and buy up the 6% but to be honest, we could never afford it.

Has he violated Common Law or any other laws by doing what he is doing?

 

[dee_dub]

Buying shares is legal. Meeting with another person is legal. Harboring bad thoughts towards the company *might* be a breach of his fiduciary duty, but with no damages. As was suggested to you in another thread, actually forming a new company that competes with the existing company could very well be a breach of his fiduciary duty as a director. It also might go against non-compete clauses you might have in your bylaws or shareholder agreements. But if he hasn't actually done it yet, I suspect you have nothing to go on. You should see a corporate lawyer to confirm this.

Acquiring a controlling interest in the company won't allow him to tap into your employee pool - if it would be a breach of his duty when he's a 45% owner, it will still be a breach when he's a 51% owner.