Legal Question in Business Law in California

Re: Stockholders Rights in Sale of Corporation

Assuming your questions concern a California corporation and you performed employment services for that corporation in California, there appears to be a considerable amount of legal issues at play here. For one, unless you are a minor, your father may not be able to control the issue of whether you are entitled to reasonable compensation for services rendered. I would suggest you pay a visit to the local Labor Department of the State of California to discuss your right to payment of any compensation you feel the corporation owes you. The practice of paying a sales commission for the sale of a closely held company's stock may be equally questionable as well. Similarly, unless there is some other agreement providing otherwise, it is questionable whether your father can demand full payment from the buyer for 100% of the stock sale (from your question, he only owns 52% of the stock). It is obvious you have concluded there is something wrong with the whole transaction. The only way you are going to feel better about the entire transaction is to retain the services of a local business law attorney to advise you. It is suggested you do this right away to protect and preserve your business interests and any other claims you may have against a California employer.

Re: Stockholders Rights in Sale of Corporation

SEE A LAWYER. TAKE THE TIME AND MONEY, IF NECESSARY, TO GET SOUND LEGAL ADVICE. Generally, profits on the sale should be distributed to shareholders pro rata according to their respective ownership interest. However, there are situations that would justify adjustment (e.g. repayment of loans made by shareholders to the company, unpaid wages or salaries, etc.). There are a number of documents that a good attorney will want to see (K-1 and/or other corporate tax filings, evidence of stock ownership, notices of meeting, corporate articles and bylaws if you have them, shareholder agreements, corporate minutes, etc).

Re: Stockholders Rights in Sale of Corporation

Your question does not have sufficient information for a precise reply. However,

the majority owner of a corporation has a fiduciary duty to treat the minority owners

fairly upon a sale. Some of what you mention seems more like a "freeze out", or attempt to

make your ownership interest worthless. That would not be correct. As to the commission,

the documents would have to be reviewed. If the commissions are on corporate assets, the

money should go to the corporation. If your father will be a consultant and render

some services in that capacity, he may be entitled to a fee. Likely, aspects of each

are involved and the corporation's assets (including its goodwill) are involved in the

commission.

I agree with the warning that you need legal assistance promptly to secure your rights.