Legal Question in Business Law in Texas

I am the CEO of a small start-up LLC. Right now we are trying to find a new web designer as the previous one took about $15k and produced a non-functioning and visually unappealing monstrosity. Naturally we aren't too happy about losing the money, but certain facts have come to light which indicate that our vice-president of sales and marketing may partially own or have an interest in this web-design company (he recommended them to us naturally). Don't officers and/or board members of a corporation owe a duty to disclose any conflicts of interest? We don't have any formal employment contracts but in light of these new revelations and many other factors I have come to the end of my rope and would like to cut him lose, based on a solid legal reason. Please advise.


Asked on 3/19/10, 4:04 pm

2 Answers from Attorneys
Charles Williamson Charles J. Williamson, Attorney At Law

Yes, officers of a corp. are, indeed, supposed to avoid conflicts of interest and it appears your VP failed in this regard. What do your articles of incorporation say?

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Answered on 3/24/10, 6:24 pm
Darrel Behring Darrel D. Behring, PC

Principals, officers and most employees of a company should at least disclose any interests they may have in companies you are dealing with, especially when it may cause a conflict of interest. I noted that you only have some facts that "indicate" he may have an interest in the web design business. If you use this as "cause" to terminate and the facts are not as solid as you think, it could be problematic. Since Texas is an employment at will state you can terminate for any reason or even none. Since you state you are at the "end of my rope" I assume his job performance has not been very good. It looks like a termination because he just is not working out would be one option that may be better than the web design fiasco.

Darrel Behring

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Answered on 3/24/10, 7:22 pm


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