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small business minority owner's rights

Discussion in 'Business & Corporate Matters' started by jesse2109, Oct 27, 2020.

  1. jesse2109

    jesse2109 Law Topic Starter New Member

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    Jurisdiction:
    Virginia
    small business minority owner's rights
     
    Last edited: Oct 27, 2020
  2. zddoodah

    zddoodah Well-Known Member

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    Do you have a question for us?
     
  3. adjusterjack

    adjusterjack Super Moderator

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    What kind of business entity?
    Any written operating agreement?
    Did you invest money and let others run it?

    What's happening to you that's is giving rise to the question?

    Details count.
     
  4. jesse2109

    jesse2109 Law Topic Starter New Member

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    I left the company and I'm a 20% owner for 15 years and am trying to recover my 20%
     
  5. jesse2109

    jesse2109 Law Topic Starter New Member

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  6. jesse2109

    jesse2109 Law Topic Starter New Member

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    s corp/2-3 million gross yearly/no written agreement/invested money/paid 20% yearly business taxes/
     
  7. jesse2109

    jesse2109 Law Topic Starter New Member

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    NEW
    s corp/2-3 million gross yearly/no written agreement/invested money/paid 20% yearly business taxes/
     
  8. army judge

    army judge Super Moderator

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    Thank you.

    I will forever remember those very special words!
     
  9. adjusterjack

    adjusterjack Super Moderator

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    20% of what?

    Did you derive an income during those 15 years? A share of the profits?

    That's unfortunate.

    How much did you invest? Did you buy shares? Was your investment memorialized in the Articles of Incorporation? Are you allowed to sell your shares? Are you entitled to a continuing share of the profits even though you know longer actively work there?
     
  10. zddoodah

    zddoodah Well-Known Member

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    I'm not sure why you're seemingly trying to be as vague as possible. It would be helpful if you would write using complete sentences with proper sentence structure and punctuation.

    Also, despite FIVE posts in this thread, you still haven't asked a question.

    I think what you're saying here is that, for the past 15 years, you have owned 20% of the shares of a corporation. Is that correct?

    When you wrote that you "left the company," I assume that means you used to be, but no longer are, an employee of the company. Correct?

    If both of those things are correct, what makes you think you have any right or ability "to recover [your] 20%"?
     
  11. jesse2109

    jesse2109 Law Topic Starter New Member

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    10k for 10 shares/10 shares 5 years of service/I don't know on AoI but probably not
    Since its an S corp, I'm entitled but a distribution would never happen since I'm gone
    I was an active employee that contributed about 50% of the yearly gross/net proceeds
     
  12. Zigner

    Zigner Well-Known Member

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    I'll take a stab at it...


    HUH?

    Please try to write out an understandable and brief post that actually describes your situation and asks a question. This random flow of information does little to help us understand your concern.
     
    Tikigirl12, justblue and zddoodah like this.
  13. zddoodah

    zddoodah Well-Known Member

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    Amen!

    As I wrote previously: It would be helpful if you would write using complete sentences with proper sentence structure and punctuation.
     
    Tikigirl12 and justblue like this.
  14. jesse2109

    jesse2109 Law Topic Starter New Member

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    Yes, i was an employee who brought in at least 50% of revenue most years. Any profits were moved forward to the next year
    My apologies. I was unsure of the site.
    I paid 20% business taxes, state and federal last year and will this year.
    It is my understanding that with an SCorp,, I'm entitled to any distribution per year, if one occurs.

    Why do I still not own 20 shares of the company and am entitled to a fair price for those shares? If I purchase 20 shares of a company and do not work for them, I still own those 20 shares unless the company folds.
     
  15. Zigner

    Zigner Well-Known Member

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    Sigh...

    If you feel that you are somehow being cheated out of your share of the money, then it's time to talk to an attorney and not an internet forum.

    Best of luck to you.
     
  16. adjusterjack

    adjusterjack Super Moderator

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    You're right. And I agree with Zigner. The only way you are going to get this resolved is with the help of an attorney.
     
  17. Zigner

    Zigner Well-Known Member

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    I agree that you own the shares, and you are entitled to sell them to whomever you want for whatever price you can get. On the other side of the coin is that fact that you can't force anyone to buy them from you and you aren't necessarily entitled to any sort of distribution just by virtue of owning the shares.
     
  18. zddoodah

    zddoodah Well-Known Member

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    Not sure what this means, but there are still facts that are not clear. Let's try it this way:

    1. Do you currently own 20% of the shares of the corporation? Yes or no?

    2. What makes you think you have any right or ability "to recover [your] 20%"? Please note that I am not implying anything by this question, so please don't respond by asking something like, "Are you telling me that...?" No, I'm not telling you anything; I'm asking a question.

    While I wait for those answers, I'll make a couple points:

    1. Whether a shareholder of a corporation is entitled to a "distribution" or a dividend is dependent on a number of factor, starting with the corporation's by-laws. While those by-laws could say virtually anything, it would be quite uncommon for by-laws to say that a shareholder who is also an employee will receive more or less money based on how much of the corporation's revenue he/she brings in.

    2. Just because you're no longer an employee of the corporation doesn't mean you're entitled to anything. Again, it depends primarily on the corporation's by-laws.

    3. The fact that you invested $X 15 years ago is almost certainly meaningless. Your investment (presumably) bought you shares. Those shares may entitle you to dividends, but it's just as possible that you'll never see a single dividend. You used the term "distribution," but that begs the question what is being distributed?

    4. The termination of your employment likely has no impact on your continued ownership of corporate shares. Unless the by-laws say that the termination of your employment divests you of your shares, you should still own them.

    5. Just because you own shares doesn't mean you're entitled to "recover" your initial investment. That's not how corporate shares work. While your corporate shares presumably are not publicly traded, let's say that, in October 1985, you had bought $1,000 worth of shares in Apple. According to one investment calculator, you'd be able to sell those shares today for over $25 million. However, if you had made the same $1,000 purchase on September 25, 2012 and had sole your shares on March 25, 2013, you'd have lost over $275.

    In the case of a non-publicly traded corporation, there is generally no public market for the shares. You are free to sell your shares (unless the corporation's by-laws restrict that), but you'd have to find someone willing to buy the shares from you, and there's no guarantee what price you'll receive (and there's certainly no guarantee that you'll receive the same amount that you paid for them 15 years ago.

    Smart business folks create by-laws that include things like restrictions on the sale of shares, requirements that the corporation buy back a shareholder's shares, and mechanisms for valuing a shareholder's shares. Needless to say, we don't know what your corporation's by-laws say. You, on the other hand, do know (or should know) what they say (or should have the ability to find out what they say).

    At the end of the day, if you think you're entitled to something and the other shareholders don't want to give it to you, you're going to need the services of a local attorney.
     
  19. jesse2109

    jesse2109 Law Topic Starter New Member

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    I had an attorney for a year and all that was achieved was an analysis of 4 years of taxes to determine the "value" of the company, a demand letter was sent and ignored. We were told if we could a find a buyer, then sell them. We reduced the offer and was told that was more reasonable. That was in December 2019 and we have been put off or ignored. The only choice I was told was to get a litigator and he was in the adjacent office and to file suit. He said the only choice was to file a malfeasance law suit and that I needed proof. My question to him and to you is what access to documents do I have? I know a lot of the malfeasance that occurred but I don't have "proof" that goes back to the document requeast.
    He said that he could not help me and turned me away.
     
  20. jesse2109

    jesse2109 Law Topic Starter New Member

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