Legal Question in Business Law in California

Re: My partner will leave the company

I can help you with yoru corporation. My office handles these issues quite frequently. Please let me know when we can speak to best figure out these issues you have.

Regards,

JDH

619.298.1969

Re: My partner will leave the company

First, a mild suggestion: I understand what you meant, but it's probably better not to use the term "partner" unless your business relationship truly involves a general partnership or limited partnership - your business is clearly a corporation, and technically you may be co-promoters, co-directors, etc., but not partners.

Here's what needs to be done:

1. Between the tow of you, you should have a simple letter agreement stating that X hereby resigns from the Board of X&Y, Inc. and transfers all of his right, title and interest in X&Y, Inc., including his right to receive shares, to Y (or to X&Y, Inc. - either you or the corporation itself can buy him out with about the same net result - ask your accountant about possible tax differences); and that in exchange, Y (or X&Y, Inc.) has paid $$$ (some valuable consideration) to X. This agreement, if properly done, will completely remove X from the corporation, both as a shareholder and as a director. If X was also named as an officer or as the registered agent for service of process, the agreement should contain his resignation from those positions as well.

2. Promptly after the changes become effective, file an amended statement of officers and directors with the Secretary of State. The form can be obtained on line at www.ss.ca.gov and go to the business portal and select forms. Remember that a California corporation must have three officers (a president or CEO, a treasurer or CFO, and a secretary), but one person can hold all three offices.

Finally, you should review your bylaws and adopt any revisions necessary to reflect the departure of X.