Legal Question in Business Law in Florida

Dear Sir/Madam:

Every year or at the times specified in your shareholder agreement or bylaws, there is an annual meeting.

At the annual meeting a governing board is elected that is usually chaired by a president or general director. In Tallahassee there is a record of who that person is. It is not presumed but rather is very explicitly determined.

The board is empowered by the shareholders to make decisions for all shareholders and for their general benefit. Is similar to a democracy where we elect our representatives in congress to represent the interests. Once the board of directors is elected you will not be consulted about any decision as far as the corporation except if that type of decision is specified in the bylaws to require a shareholder vote. Now, if the directors, or president are committing acts that are outside of good faith, sound business decision, fraud, or otherwise you may have a derivative action against the corporation because they are breeching their fiduciary duty towards you of properly conducting the corporation.

However, an investor, regardless of size, even 95% cannot make a change with the state absent a shareholder meeting, or vote of the board of directors. If he/she did that it has done an illegal act. Any changes have to be made on a corporate resolution that has to be held according to the bylaws/shareholder agreements.

If is a type C corporation, the shareholders are liable only to the amount of their investment but also how diversified in the number of investors the corporation is. If there are just 1-2 investors then it would be easier to demonstrate that this corporation is used as an alter ego of those individuals and then they could be responsible. In your case the investor would only be responsible with the amount of investment. In other words, the investor came with a specific amount that he/she pledged to the corporation for its use, a use determined by the board of director's decisions.

From what I understand you are the president (presumed). What you should do at this stage is to contact an attorney and present him/her more information because on just you gave us it is insufficient to understand the situation. Once the situation is clarified then you can decide on the best cause of action based on your interest in the matter.

My office provides a free 30 minutes consultation on this type of matter where you can get a better idea about your case.

Sincerely yours,

Daniel Lenghea