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hopefulS · Jun 24, 2009, 08:51 AM

I am a 50% owner of an S-corporation. My partner is not longer interested in continuing the business, but I would like to. He says he is "shutting it down." He is more of a silent partner, I actually work 50+ hours per week on all of the business job. He can't make a decision like this on his own... correct?

AK lawyer · Jun 26, 2009, 06:06 PM

Well, yes, with reservations.

He can go to court to force a disolution. That can be complicated.

How many directors are there on the board of directors? How many directors will go along with him?

hopefulS · Jun 30, 2009, 05:38 AM

It is just the two of us. I own 50% and he owns the other 50%. It's a very small business.

AK lawyer · Jun 30, 2009, 08:53 AM

Originally Posted by hopefulS

It is just the two of us. I own 50% and he owns the other 50%. It's a very small business.

Then he cannot get a majority to vote to dissolve, and will have to go to court and attempt to show the court that there is an impasse and therefore the corporation cannot continue to function.

This is an example of why, in forming a corporation, it is always a good idea to provide for an odd number of directors (three for example) so as to avoid an impasse. In this case you could have asked a mutual friend to agree to be a director of your corporation.

I suspect that you, like probably most people forming small corporations, have neglected to follow the corporate procecures. You've never held a directors' meeting, adopted, bylaws, etc. have you? :(

Ok, now that I've gotten that out of my system,.

How much has each of you contributed to the capitalization of the company?