Legal Question in Investment Law in California

Re: obligation

When someone 'puts money into' a corporation, the investment can be one of two things: a loan of some kind, or an equity investment. If it's a loan, the party becomes a creditor. If it's equity, the party becomes a co-owner of the corporation.

Whether a particular transfer of money to a corporation is a loan or an equity investment depends upon the facts and circumstances. Usually there will be a written instrument of some kind that pretty well disposes of the question, such as a share subscription agreement for an equity investment, or a promissory note, mortgage or bond for a loan.

Where the parties have not executed any instrument, the judge or jury would have to look at all the surrounding circumstances, including any evidence as to how the parties treated the infusion of money, whether the investor took an active role in the business, etc.

Your question is not complete -- it ends mid-sentence -- so I can't give you a complete answer, but there is some suggestion in the facts given that the other party thinks she is a co-owner. It is also possible a court would find a partnership or joint venture between your corporation and this individual.

As to reimbursement for money spent, you may or may not be liable on any particular item. The person may be the corporation's agent. Only a full examination of the facts would reveal whether the agent was entitled to reimbursement by the principal for a particular expenditure.

The one thing that is clear is that you need more knowledge about how corporations are organized, financed and governed, or you could get in serious trouble, if you're not already there. I suggest you read a self-help law book about managing your own corporation. If questions remain, see a business lawyer.