Legal Question in Business Law in Texas

Oral Agreement - 50% Ownership in a startup company

My brother and I started an IT company. He ran the backend

and I ran the front end for 3 years. Throughout the years he has told me that I own 50% of the company. Relatives, friends and my brother all agree that I own 50% of the company. My bother's wife had an affair w/ one of our clients in July (she started working w/ us a year after we started the company). He fired her then brought her back in to the company. They ended up getting a divorce in which he kept his vehicle & house. She got her vehicle, furniture and the company. She fired my brother in Sept. and myself in Dec. I had issues personally and did not get a chance to discuss w/ my brother the oral agreement we had discussed (I might have an e-mail that states our agreement). He made no mention that she would get the company in the divorce.

Do I have any claim or stake in the company for 50%?


Asked on 1/02/04, 3:50 pm

3 Answers from Attorneys
Elizabeth Schaefer SCHAEFER LAW FIRM

Re: Oral Agreement - 50% Ownership in a startup company

Go through your files and speak with your brother to determine what documents might have been filed in the TX secretary of state's office, you can also search the website at www.sos.state.tx.us to find what might be filed there. Also, did you enter into a written agreement with your brother or do you have documentation of the amounts of your investment, participation in management and decision-making or sharing or profits or losses? These can all factor into the determination of your ownership of the company. Your brother's wife cannot now have any more ownership/authority than your brother previously had.

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Answered on 1/05/04, 11:54 am
Charles White Charles G. White

Re: Oral Agreement - 50% Ownership in a startup company

I could start out saying out that you should fire the brother's ex-wife, and rehire yourself. However, it may not be all that simple. Now is the time to meet with the brother, and see how it was all set up. If the documents were properly put together, she would not be in a majority position to hire or fire any officers or employees. If that does not work, find out who the lawyer is and see what information that you can get from him.

In the meanwhile, find out what information was filed with the State of Texas. You can get this information by going to:

http://www.cwhitelaw.com and click on "Corporate Registered Agents", then "Texas" and enter the name of your company. If that search shows nothing, enter the first words of the corporate name.

If something is not resolved quickly, it seems that you will have no choice but to hire a lawyer, and initiate a lawsuit, where your brother and his ex-wife may become parties.

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Answered on 1/02/04, 4:47 pm
Peter Bradie Bradie, Bradie & Bradie

Re: Oral Agreement - 50% Ownership in a startup company

Depends. Did you share in 50% of the profits? If so, you may be able to show a partnership. Even if the only paper is an assumed name certificate with his name on it.

If any other business entity was actually formed, such as a corporation or an LLC, if you don't have share certificates, you probably don't have a provable claim. However, if the paperwork was as sloppy as you have reason to believe, you may establish your right to 50% in a lawsuit.

Speak with your brother first and sound him out as to what the situation was. If he'll vouch for you, you can proceed with a lawsuit for a judicial determination of ownership.

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Answered on 1/02/04, 5:00 pm


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