Legal Question in Business Law in California

If you are a corporation or LLC, then you should have an operating agreement that defines how you can force out a minority member and how that member's share is valued. In the absence of such agreements, it is much messier. My advice is to meet with an attorney who can reciew your business documents and give you specific advice.

One option is to dissolve the corporation, and start a new one without him as an owners. Lots of potential land minds there, be careful.

You may be better off not forcing them out at all. A minority shareholder has basically zero power. In a close corporation like yours, that puts a burden on you not to act contrary to his interests at the benefit of your own, but if you make business decisions that improve the operation of the company, he has no grounds to complain. If, in order to manage the business properly and profitably, he needs to be removed from day-to-day involvement in the business, then so be it. If he is an employee, fire him. If not, simply pass a corporate resolution that he be barred from interfering witht he daily operation of the business. If he then shows up and distrupts the business, you can get a restraining order against him. If all this is done with the guidance of an attorney, he will have little luck finding anyone to take a case against you for it. It also may then result in him demanding that you buy him out.

You end up in legal dispute, and will follow the rules set in your Bylaws. I always suggest mediation to resolve the problem and valuation, to avoid litigation expenses that will end up with an outcome ordered by the court. If you can't stand his minority voice in the company, there is a range of things you can do. You can try to buy him, or could close the company and distribute the assets, or could force him out with a pay off established by appraisal. If serious about hiring counsel to protect your interests and rights, feel free to contact me.

The other attorneys are right on point here. A minority shareholder has zero power or say in how things are done.Consult with an attorney in your area for specifics.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

Well, I wouldn't say zero power! For example, with cumulative voting for directors, you may be mathematically unable to get a dissident off your board. If you are an S-corporation, the minority stockholder can de-elect "S" status for the entire company. However, you must distinguish between the minority stockholder as such, and as a participant in your day-to-day operations. Just fire the person. Change the locks. Move the bank account. Ignore him.