Legal Question in Business Law in California

Re: capital stock

You have an interest. A question does exist which has to be resolved from the records of the company of what that interest is worth. I would not divest your interest without consultating an attorney. If you want assistance, you can contact our office at 714 363 0220. We handle cases throughout California.

Re: capital stock

Need to see the paper, but it sounds like it.

Re: capital stock

Your best course of action depends to some extent upon what a 5% interest in this business is worth. If the company is substantial enough to have several employees over a long period of time, it is more likely than not that a 5% stake in it is worth an investigation by a business lawyer or at least an accountant working for you.

You are, as a part owner, entitled to annual reports and to inspect the company's books and records. You should get a lawyer and/or an accountant and demand an inspection.

I believe you should also acquaint the buyer with the fact that you are a minority owner. The majority shareholder may have "overlooked" mention of that fact to the buyer.

Minority shareholders have additional rights, including the right (when the business is sold) to demand an appraisal and a buy-out at the appraised value of their fractional interest.

Again, how far you should pursue this and at what expense depends upon what 5% might be worth.

However, don't take the other guy's word for it being worthless. That could be a ruse.

Re: capital stock

If the stock was actually "given" to you as you state, then you own it and don't have to give it back.

Re: capital stock

An addendum to my prior answer:

Depending upon the type of company this is and the status of its stock at the time you received your shares, there may be paperwork which various securities laws required you and the company to execute and possibly to register with the SEC. If some of these requirements applied but were not met, you might never have become the rightful owner of the shares.