Legal Question in Business Law in California
my business partner and I formed a corporation 6 years ago, I am the rmo, ceo and president. It is a constructio company. He is the only officer other than myself. he emailed me saturday that he was having a board meeting on monday, knowing full well that I was out of town. In the meeting he told me that he swore in two officers (his friends) and they voted that I was terminated. Is this legal?
3 Answers from Attorneys
Sounds problematic on the surface, but you need to review the bylaws and any agreements between the two of you (if any) to see what they say. Also, what is the percentage of ownership?
Legal? Probably not. The Corporations Code (and, perhaps, your bylaws) provide significant protections against a 'coup d'etat' by a fiduciary and co-owner. Your post doesn't provide enough information to allow me to provide you with specific references to the Code, but it is 97% or so likely that these actions are illegal or indefensible. Among other things, electing and swearing in new officers does not give the new officers any power to terminate you; the CEO and president of a corporation serve at the pleasure of the directors, not a committee of other officers. As one of two co-owners, one must assume that you are one of two directors. That being the case, no one can remove you; it would take both directors voting in unison.
I specialize in addressing this kind of corporate infighting. If you'd like knowledgable and immediate intervention by a lawyer, contact me immediately, and we'll call his bluff and maybe save the business.
I would just add to Mr. Whipple's comment that the board of directors cannot elect new board members in any corporation I've ever seen. It takes a shareholder's meeting, and unless your bylaws permit a shareholders meeting on such inadequate notice, and unless your "partner" owns more than 50% of the shares outstanding, there is nothing even remotely legal about this. Considering you are the RMO, he also has a problem with the fact that your corporate license is no good if he fires you without a new RMO on board first.
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