Legal Question in Business Law in Louisiana
I am currently a shareholder in a corporation and have not been involved in any of the financial matters. I recently learnt that the CEO who owns the same amount of shares secured a personal loan for property using the Business as colateral. Is this legal?
2 Answers from Attorneys
It will depend on what powers he was given in the corporation bylaws. Also, the shares have a value, he may have received a loan on the value of the shares.
As a Franchise Attorney I basically agree with the other attorney and add the following. It's likely he pledged his shares as collateral, not the business assets as this would normally require approval by the entire board of directors. Consult with a good business or franchise attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation
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