Legal Question in Business Law in Maryland

Business partner problem

Partner and I have corp. owning equal shares. He said he wants out. Company has been making sales for past 2 yrs. but no profit yet. We own about $3,500 in equipment and inventory. He wants extra money for things he claims he did for business. I say business has no value other than assets at this point. He has withdrawn co. money to help finance his wife's business. Paid back the first time, not the second time. Also took out an additional $400 he say is part of his investment without consulting me. Is this an act of disloyalty or breach of trust? What are my best options? Thank you.


Asked on 2/28/09, 7:51 pm

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: Business partner problem

To properly function as a corporation, you should have corporate bylaws that define the shareholders' rights and duties. Of course, given the rift between you and your partner, it sounds like it's too late to put anything into place if you didn't do so at the outset. If you want to continue the business, you should try and buy his shares. If you can't agree on a price, see if he'll agree to have the business evaluated by a CPA to determine book value per share, with the understanding that you can buy his shares for that price. Generally, absent a management agreement he wouldn't be entitled to special compensation. His unauthorized withdrawal of company funds is a breach of his fiduciary duty as a director/officer of the company.

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Answered on 3/03/09, 5:11 pm


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