Legal Question in Business Law in Massachusetts

I've been involved with a seafood logistics project located on Bostons waterfront. As compensation I would receive a non-dilutable 10% share of the holding company and 10% non-dilutable share of the development company. At this writing the primary stock holder would like me to give him 4% of the Holding company which would maintain his majority interest. In return he would make up the difference on the development side of this project. He also noted that I would not lose any value. I have not given permission to anyone one nor have I agreed to this offer. I believe he has moved forward without my consent and is ready to present to the Board of Directors. Can he do this? I have made a number of attempts via email to reach him, his accountant and attorney with no response. I am out of work and have no income or savings to compensate an attorney. I would be grateful for any advise.


Asked on 4/26/10, 1:34 pm

1 Answer from Attorneys

A bit more information is needed to give you a correct analysis. Assuming there is a written agreement and it says what you have said it says, then he cannot dilute your interest.

There is an alternative to you giving up the ownership, you could give him an irrevocable proxy which he can use as long as he continues to have voting control of more than 50% or more of the holding company. If he gets diluted to 50% or less of the voting share, you get back your rights to vote. You would not allow him to use your shares to dilute your interest in the holding company as a restriction.

I tend to believe that you are a founder and your 10% non-diluted is limited to the first round of financing and after that everyone can be diluted. However without reading your agreement I can't give you any definitive answers.

Please feel free to contact me if you have more questions.

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Answered on 5/01/10, 2:00 pm


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