[jag1149]

I am a 50% shareholder with my mother & dad at 25% each. We own a farm that is leased to my brother. I left the area for about 12 yrs. Because of my parents. I've since come back and have taken over position of sec.-treas. My mother has refused to turn over past invoices of the corp. Upon some looking at past records I found that she never billed the utility bills to my brother while he was leasing the farm. When asked why, she said he was family. This amounts to over $ 50,000.00. Can I bill him for the utilities? Can I go after my mother for failure to bill him? I think there was some sort of conspiracy to defraud the company. What steps can I take?

Quorum

Is a quorum determined by the people or shareholders? I own 50% and the 2 others own 25% each. Is there a quorum with the 2-25% shareholders or do they me to make a quorum? I live in Montana.

[talaniman]

I would think it were more accommodation or special treatment, than a fraud but what does his lease agreement call for? That would be the determining factor. Gone for 12 years is no excuse for not handling your business, and leaving it to others is a consequence. Define things going forward, and as for a quorum, that's something set in writing in the bylaws or company charter. Failure to do so makes your extended absence even more costly, as the remaining partners basically had carte blanche to handle business their way.

Again lacking any set rules of procedure to address the current situation, some restructuring, and clarification is necessary. A company charter is where you start. Then you can proceed and maybe recoup past losses by restructuring the lease agreement with your brother. Its difficult to prove fraud though without examining the terms of the lease. An attorney/accountant is the logical choice to review and advice such actions.

[ScottGem]

What are you referring to about a quorum. A quorum is usually defined in corp by laws.

I also do not see any fraud here. This is a family owned corporation. How were the utilities paid?

What are the terms of the lease?

I'm guessing here, that the corporation owns the farm. That the brother pays an annual lease payment which is the sole income of the corporation. Is the farm mortgaged? What are the expenses of the corporation? If the only asset is the farm this should be pretty simple accounting. You get 50% of any profit, they share the other 50%. If they paid the utilities out of the profits, then they owe you $25K. So you can deduct that from their profits.

[AK lawyer]

Google "Montana statutes". Find the corporation code. There you will find the law on what makes a quorum. Normally it would be 51% of the outstanding shares, but there may be distinctions for special meetings, etc. of which you should be aware.

[jag1149]

The utilities were not mentioned in the lease, however the lease stated that they had to pay for all maintanence & upkeep. I believe that my mother who is single and loves my brother purposely paid the utilities for him. The is no mortgage on the farm and it is a share crop bringing over 100k per year. My parents used the corporation as their own checkbook writing checks out for food, phones,gas, secondary health insurance cosmetic surgery for false teeth, and payments for a nursing home to be used at a later date. Every time I asked to see the books I was denied acess and threathened that they would give their shares to my brother. It wasn't until later I found out they couldn't. Since taking over as Sec.-treas. I have asked for all the paper work and invoices of the corp. but my mother has said she will not turn them over. Do I have to sue her to get them back? AS you can see this is a total mess.
Should I just go to the DA and tell him of the possible misuse of funds, or have an audit to see how much money they have taken personally? I believe it's in the 300K for each of them. Their insurance alone was about 10,000.00/yr. after they went on medicare. The corp. was formed in 1983 and my dad is now 85 and mom 80.

[ScottGem]

You are putting the cart way before the horse here.

You say the farm brings in more than 100K per year. But what are the terms of the lease? Did the lease simply specify a monthly/annual payment to the corporation? Or did it specify a share of the sale/profits of the crop?

Remember your mother and father are entitled to 1/2 the proceeds of the corporation. So you first have to show what the proceeds were then show they took out more than 50%.

You need to hire a lawyer and, probably, a forensic accountant to review the books.

[jag1149]

It was a crop share 1/3 of the crop.
Is this something that our new corporate lawyer can do?

[ma0641]

I'm sorry you have such a bitter attitude with parents and siblings, it is almost toxic. Suing your mother?

[ScottGem]

It was a crop share 1/3 of the crop.
Is this something that our new corporate lawyer can do?

Yes it is. You really need to try to get an accounting before you start throwing around accusations.