INC question

[topaz2001]

I formed an INC with a friend of mine about 2 years ago. It turned out, I did all the work, got all the clients, and was splitting money with him up until this past month. I told him that I could not keep paying him for doing nothing. He also spent company money without permission, etc.

In the INC papers, it looks like there are 20,000 shares, but each of us only own 100 shares each. I am the President an Treasurer, and he is the Vice-Prez and Secretary. We are the only two shareholders, and both named as Directors. I want to continue the business name and continue doing business, but I want to get rid of him, stop splitting the money with him, but I don't want 10 years to go by and get slapped with some kind of lawsuit. How can I go about doing this now so problems don't arise in the future?

 

[Michael Wechsler]

I formed an INC with a friend of mine about 2 years ago. It turned out, I did all the work, got all the clients, and was splitting money with him up until this past month. I told him that I could not keep paying him for doing nothing. He also spent company money without permission, etc.

In the INC papers, it looks like there are 20,000 shares, but each of us only own 100 shares each. I am the President an Treasurer, and he is the Vice-Prez and Secretary. We are the only two shareholders, and both named as Directors. I want to continue the business name and continue doing business, but I want to get rid of him, stop splitting the money with him, but I don't want 10 years to go by and get slapped with some kind of lawsuit. How can I go about doing this now so problems don't arise in the future?

I'm assuming that you don't have bylaws or other terms that deal with a buyout? If not then you can negotiate with him and tell him either (a) he agrees to accept $100 for the shares he owns or, (b) you are going to stop working for the company and the company will be dissolved. This is probably the easiest route and you can hopefully part as friends. You may want to begin the conversation about you taking over the business and then, as a last minute friendly gesture, offer $100 or whatever reasonable amount might be appropriate if he brings up his contributions to the business. Bottom line is some is better than none and amicable settlement is always quicker than an adversarial one. This is moreso when things aren't clearly set forth prior as is the case here.