Legal Question in Business Law in California

Re: Giving back shares in corporation

In general, there's no way to force a company to buy back or receive back its shares, once regularly issued to you. This is one of the reasons many companies and their initial investors execute fairly detailed buy-sell or repurchase agreements. However, if you own 15% and the new guy has 85%, he'd probably be willing to negotiate a decent deal with you to eliminate the prospective nuisance of having a minority interest to deal with.

I'd approach him as soon as possible, while he's still relishing his success in acquiring control of this company. You may get a better deal now than in a year or two.

There is a possible way to put some pressure on the new owner, and that is to revoke, or threaten to revoke, your election of "S" status with the IRS. This only works if the shareholder is gaining benefits from the tax pass-through feature, or expects to in the future. As I understand it, "S" status requires the on-going assent of 100% of the stockholders.

There is a ton of law on the subject of minority shareholders' rights, or sometimes the lack thereof, and a ton of dirty tricks that majority holders can do to oppress minority owners, and a few (like de-electing "S") that work the other way. When push comes to shove, the little guy can end up painted into a corner unless he is either well-coached or has a lot of economic and legal clout outside of the minority holding. Good luck.