Legal Question in Business Law in California

My wife and her mother own a business. They each have 1000 shares. The agreement states that a husband and wife are viewed as one shareholder. However, my step-father and I are listed with 1000 shares with an * beside it (1000 *). The note beside the "*" states that we have a community property interest. Does this mean the 1000 shares held for my father-in-law and the 1000 shares held for myself are held as treasury stock by the company. My wife and I are getting a divorce at here petition. Does this mean that will be 3000 shares outstanding and I own 33 1/3% of the company with 1000 shares still held as treasury stock? Thanks in advance for your prompt attention to this matter.


Asked on 8/06/09, 1:26 pm

1 Answer from Attorneys
Nina Ortega

More facts are needed here but I suspect the business has a total of 2000 shares outstanding, 1000 owned by you and your wife as community property and 1000 shares owned by your in-laws as community property. If you end up splitting the stock down the middle with your wife, you will end up with 500 shares, or 25% of the company. However, there may be a shareholder's agreement that could change this result so, like I said, more facts are needed.

Treasury stock is stock that is issued by the company and then bought back by the company but not retired. That does not seem to appy here.

Your divorce attorney should be able to sort this one out.

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Answered on 8/06/09, 1:34 pm


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