Legal Question in Business Law in Ohio

Rights of Minority Shareholders - Private Corporation

My wife is 49% shareholder in a private corp. Her brother is 51% owner. All three of us are personal guarantors on loans exceeding $1 Million, taken out to purchase the company. We are all officers of the corp. Her brother and I work for the company, she does not.

We purchased the company from my wife's (and her brother's) father. The intention expressed by my father-in-law was that the company stay in the family, and would be run by my wife's brother and myself. There are many people who were present at many meetings when he expressed this intention. My father-in-law is Chairman of the Board.

Our agreement at the time of the purchase of the company was that I would represent my wife's interests in the company (I have durable power of attorney over her). However, her brother makes all decisions for the company, without consulting her or me. Can she insist that he include us (or me in her absence) when considering any matters which may affect the profitability and/or survivability of the company?

Since I am Treasurer, can he overturn my decisions as they relate to the finances of the company (i.e. whether or not a customer should be C.O.D., whether or not collection calls should be made, etc.)?


Asked on 12/01/03, 12:58 pm

2 Answers from Attorneys
Steven Martinek Steven Martinek Lawyer Ltd.

Re: Rights of Minority Shareholders - Private Corporation

For specific response to your questions, consult the by-laws of the corporation and the job descriptions. I would urge you to consult with a mediation service (not an arbitration service). Offer to advance the money for mediation (available for less than $2,000.). The mediator is a neutral party, with business experience, who will control the process and seek to assure the fairness of the process. The parties will address their individual and mutual concerns. The mediator will ask cogent questions after meeting with both parties together, and the several parties individually. Any decision will be by the consensus of the parties, rather than imposed by a court or arbitrator. It is logical, cost-effective, and it works. Steve

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Answered on 12/01/03, 1:44 pm
Joseph Jacobs Jacobs & Lowder

Re: Rights of Minority Shareholders - Private Corporation

All the answers you seek will be found in the corporation's articles of incorporation, these are the rules of the company. In there you will find how often the board has to meet and how important each's role is, who has voting power, who has decisive power.

If the corp. doesn't have these, then you go a different route.

Call me directly if you want:

Joe Jacobs 216-952-1990 / 216-227-0900

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Answered on 12/01/03, 2:58 pm


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