Legal Question in Business Law in Nevada
I own 10% of a company, my cousin owns 29% and my aunt and uncle own the rest 61%. My aunt and uncle are getting ready to retire in 3 to 4 years, last year our company started a program that pays my aunt and uncle a large sum at the end of each year to essentially by them out when they retire. I have been told by my aunt and uncle that when they retire they will leave their percentage to my cousin. My question is can they legally leave all of their percentage to my cousin, even though the company is generating their buy out over the years (again I own 10%) and my cousin isn't directly buying them out? Or legally should I be getting 10% more of the company (for a total of 20% at the time of their retirement, or a payment of 10% of their buy out? I feel like when they go to retire I am going to be screwed over. I apologize if this is hard to follow, I am not quite sure how write it clearly. Thank you for your time.
2 Answers from Attorneys
In general, there is no reason why they could not transfer or leave their interest to their child. The only thing that would prevent that is if you have an operating or shareholder agreement, etc. that speaks to this and requires something else.
ON the issue of whether this is permitted because the entity is paying for a program that buys them out, this would have to be explored in more detail. We would have to understand exactly how that works. If it was the case that monites that would otherwise have gone to you as a distribution or dividend were applied to them, then this might be the basis for a legal claim.
You may want to book a consult with a local lawyer and see what they say.
The words "legal" and "illegal" imply criminal activity, which is not happening here. A company is a private affair between its owners and you all can make any kind of agreement you want subject to the Partnership Agreement. As 10% owner you don't have a lot of say in the matter. It doesn't make sense the company is paying your Aunt and Uncle a "buy out" amount, but then they still own the shares? Something is not right here.
Good luck.
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