Management Advice

Discussion in 'Legal and HR' started by Melissa1234567, Nov 4, 2016.

  1. Melissa1234567

    Melissa1234567
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    I'm looking for some advice. I've been a 30% owner at my current job for 10 years, run and day to day and am the President. The majority owner - 60% has been completely hands off for over 12 years. He is trying to reinsert himself in the business and decided to hire another officer to work along myself with no communication on inquiry. This person is unqualified and a friend. Do I have any legal say so?
     
  2. Larry Donahue

    Larry Donahue
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    Hi, there.

    The short answer is "probably not." The longer answer is "possibly." I know these contradicting statements may not be very helpful, but that's because a LOT depends on exactly what sort of "entity" your company is and the formation documents. For example, if you have a LLC, then we care about the Operating Agreement. If you have a corporation, we care about the Bylaws. If you simply have a "partnership," then we care about the partnership agreement if one exists.

    The reason these documents are important, is they specify the powers and procedures of the owners or office-holders. Simply hiring someone in a key position may not be permissible, without a vote of the board of directors (in a corporation).

    At the very least, your 60% partner does have a "duty of loyalty" to the company and the other owners (i.e. you), and may not simply do whatever he wants with the company unless he legitimately believes he's acting in the best interest of the company.

    And, there in is the issue. Even though the person is "unqualified and a friend" (of the 60% owner, I presume), your partner may want someone in there he trusts because he may fear you're not acting in the best interest of the company yourself. In such a situation, he may be perfectly justified in doing what he's doing.

    In our blog we have a number of articles that addresses what I think may be going on over there. It's never pretty, it's always very costly, and it sometimes jeopardizes the business. This may be the signal you need to leave or have your partner buy you out. If this is an option for you, make sure you have a good "separation agreement" and that you negotiate a fair price for your ownership percentage.

    Good luck to you.

    Larry.
     
    #2 Larry Donahue, Nov 9, 2016
    Last edited by a moderator: Nov 9, 2016

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