Legal Question in Business Law in Virginia

Sub-S Corp shareholder rights

My husband is a 30% shareholder in a Sub-S corporation with the other partner having 70% shares. My husband has had a falling out with the partner and plans to leave the business. There is no buy sell agreement in place. Can the 70% shareholder sell the assets?...because he suggested he would do that if my husband left. With a corporation, I thought the only item that could be sold are shares...or since he is the majority shareholder, does he have the right to do whatever he wants to do? My husband wants to remain a shareholder but not work there. Please respond ASAP.


Asked on 5/23/03, 2:07 pm

2 Answers from Attorneys
Daniel Press Chung & Press, P.C.

Re: Sub-S Corp shareholder rights

The corporation can sell the assets but must distribute any surplus (after paying creditors) to the shareholders.

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Answered on 5/23/03, 6:31 pm
Thomas DeCaro DeCaro & Howell PC

Re: Sub-S Corp shareholder rights

Shareholders in a Virginia corporation are entitled

to be paid the fair market value of their

stock holding if the corporation sells all of its

assets outside of the normal course of business.

This provision, called "dissenter's rights" gives

you the opportunity to obtain the value of the

goodwill and other intangible value of the business

and not just the value of 30% of the assets.

Incidentally, it requires a 66-2/3% vote of the

stockholders to validly approve the sale of all

of the assets of a corporation outside of

normal business, but I assume that the other

shareholder has more than this percentage

under his control.

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Answered on 5/26/03, 1:52 pm


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