Legal Question in Business Law in Maryland

% ownership of s corp and dissolution

I recently completed my buy in of a professional services corp. I was to be the 4th shareholder and 25% owner of the corporation. I was buying 8 1/3% from each of the other shareholders who were equal shareholders. Before my completed buy in 2 of the shareholders retired. The shareholders agreement states that retiring shareholders redeem their shares to the corporation for their buy out. The remaining 3rd shareholder claims to have bought the shares of the 2 retiring shareholders thus owning 75% of the corporation with me being a minority 25% owner. I have filed for a declaratory judgement. The other shareholder has indicated he will dissolve the corporation regardless of who wins the declaratory judgement. Since the assets minus debts of the corporation are small compared to amount of money invested in my buy in I will have lost a substantial amount of money. Any advice would be welcome.


Asked on 4/19/07, 11:24 pm

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: % ownership of s corp and dissolution

If the 2 retiring shareholders were planning their actions at the time you agreed to buy in, you may have a claim for fraud against them and possibly also against the remaining shareholder. If you have not already done so, you should also consult with an attorney and have the corporate bylaws or shareholder's agreement reviewed to ascertain the legality of the remaining shareholder's claim for majority status.

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Answered on 4/20/07, 9:45 am


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