Corporate Law Corporate Stockholder Dispute

[joannie1]

I am president and 50% stockholder in a Virginia C Corporation. The other 50% stockholder, and VP, is my sister. The company was incorporated in 1999. Last year, in June 2007, we decided we could not live and work together any longer. I moved to another state up north, but we decided to keep the corporation going for awhile to see if we could sell the domain name. The books and bank accounts remained in Virginia with my sister. Over the past year, I have requested bank information, tax returns, and various other corporate information. She refuses to send me anything. She said I abandoned the corporation by moving. We signed no legal documents regarding the corporation before I moved. Moving, I'm sure, doesn't cause me to lose my rights as a stockholder. She says I can come to "corporate headquarters", aka her house, and see any records I want. After I moved, she moved corporate headquarters to another city in Virginia and changed all the bank accounts without my consent. I used to have signature authority on the bank accounts, but now I don't. I want to dissolve the corporation and divide the assets. Can I do that, as President, without her? Again, we are 50/50 stockholders.

 

[David_Staub]

As President, you have the right to call the shots unless you are overstepping the authority granted to you in the articles of incorporation, bylaws or Virginia corporate law. The board of directors could overrule you, but her vote has no more weight than yours, so the directors are deadlocked. She likely had no right to remove your name from the bank unless you had some very strange bylaws.

As for dissolution, that is typically not something the President can do. It probably requires at least a majority of the shareholders. Unfortunately for you, your 50% puts you in the same position that your sister is in with respect to your actions as President. You can create a deadlock but not take the action.

Your only recourse, if you and your sister cannot agree, is to seek a judicial dissolution. That is probably too costly for a corporation on the verge of going out of business unless your domain name is very valuable.