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I am 1/6th owner/shareholder of a small family owned oil and gas business for which I ran and grew for the last 15years without any help form the other owners/shareholders. After calling a shareholder meeting to discuss the purchase of a new machine attitudes flared. They asked for passwords to bank accounts and credit cards for which I gave to them freely because they have that right as an owner/shareholder. They found some discrepancies on the credit cards and without discussing the discrepancies with me they forced me to resign with threats to have me arrested. They will not provide me with the information they have accused me of and they have shut me out of the business. There were some personal charges on the credit cards which was in my name but over the past 15years couldn't have been more than $8k - $10K. The business is an S corporation and I have equal shares in this business. The business had a CPA firm for which the books were turned over to monthly. I was accountable for everything that went on. What legal rights do I have as far as them shutting me out and locking me out of that business?

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You have no such rights.  A shareholder simply owns a partial interest in the corporation, including a share in the distribution of dividends and assets on liquidation.  As such, the shareholder has no right to manage the corporation in any way except by voting in corporate elections.  As a sharehoder you are entitled to inspect the books of the corporation, shareholder list, and are entitled to a statement in income for your tax return.

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I am an owner of this business with 5 other family members. This business was inherited when our father passed away. Rather than close the doors we chose to continue running the business.They elected me to run this business 15 years ago. I raised this company from a mere $250K to a $1.8M business without any help from the other owners.  They just sat back and waited on their dividend checks. I was fired without notice or proof of the accusations and completely shut out.  You are telling me I have no legal rights?

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1 hour ago, ousted said:

 You are telling me I have no legal rights?

No, I said you have the right to dividends, assets on liquidation, votes for the board of directors, and a statement for your tax return.  I assume you were also paid for your work while you were building the business.

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2 hours ago, ousted said:

They asked for passwords to bank accounts and credit cards for which I gave to them freely because they have that right as an owner/shareholder.

 

I'll take your word for this, but this is not something to which shareholders would normally have a right.

 

 

2 hours ago, ousted said:

without discussing the discrepancies with me they forced me to resign with threats to have me arrested.

 

I imagine there must have been at least some discussion.  It's not clear what you resigned from (I'm guessing from a position as a corporate officer).  Obviously, you could have called their bluff and refused to resign.

 

 

2 hours ago, ousted said:

There were some personal charges on the credit cards which was in my name but over the past 15years couldn't have been more than $8k - $10K.

 

So...you admit to embezzling money but not a lot of money?

 

 

2 hours ago, ousted said:

What legal rights do I have as far as them shutting me out and locking me out of that business?

 

It would serve no useful purpose to try and list all of your rights as a shareholder -- especially since we haven't read the corporation's by-laws.  However, in addition to the things mentioned by "RetiredinVA," we have no reason to believe you don't have the same rights that you told us in your original post the other shareholders had and exercised prior to your resignation.

 

 

2 hours ago, ousted said:

They elected me to run this business 15 years ago.

 

Ok...and, according to your original post, you resigned.

 

 

2 hours ago, ousted said:

I raised this company from a mere $250K to a $1.8M business without any help from the other owners.

 

And, presumably, you drew a salary for your work.  Right?

 

 

2 hours ago, ousted said:

They just sat back and waited on their dividend checks.

 

As was their right.

 

 

2 hours ago, ousted said:

I was fired without notice or proof of the accusations and completely shut out.

 

In your original post, you wrote that you resigned.  Which was it?

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I was forced to resign for credit card purchases. I wouldn't call it embezzling. I used it for gas and some auto repairs for a personal vehicle I used for the business. Maybe I am explaining this incorrectly.  We are owners that have equal shares in this business. They voted to have me run the business 15 years ago. Which I have done very effectively.  They could have come in and helped or ask for records or anything but they did not. They will not tell me what I am accused of and how much restitution they want me to pay. They are not giving me a chance to explain any of these accusations.They have locked me out of the business and wouldn't let me have a vote in the last meeting held as to whom of the 6 of us would run that business.  I am still equal part owner of this business and they are shutting me out. Yes I was getting a paycheck. Being forced to resign with threats that I could not check out for myself is more less like a firing.  Maybe I'm ignorant and don't know what I am talking about but it is my understanding that they can not keep me from having a vote on business decisions.  The worst part is that the person they put in my place took $30K cash in the beginning and never excepted responsibility for it.  They never treated him this way. I have no idea the accusations to except responsibility for.  They will not tell me.

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You have the rights of a shareholder that have been explained to you.

 

You DON'T have any more rights due the position of Manager, Director, or whatever you called yourself, because you voluntarily resigned from that position. Nobody put a gun to your head. If you succumbed to a threat, that's on you.

 

If you still think you have been wronged I suggest you consult an attorney.

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1 hour ago, ousted said:

I was forced to resign for credit card purchases.

 

Let's just be clear.  Your fellow shareholders discovered these purchases and questioned you about them.  They threatened to report you to the police unless you resigned, so you resigned.

 

 

1 hour ago, ousted said:

I wouldn't call it embezzling.

 

That's fine.  Did you repay the corporation for the money spent on corporate credit?

 

 

1 hour ago, ousted said:

I used it for gas and some auto repairs for a personal vehicle I used for the business.

 

Ok...that clarifies things a bit.  Was the entire $8k-$10k used for these purposes?  Did you use your personal vehicle for personal purposes in addition to business purposes or was it used 100% for business purposes?

 

 

1 hour ago, ousted said:

They will not tell me what I am accused of and how much restitution they want me to pay.

 

So there may be more to this than the money spent on the corporate card(s)?

 

 

1 hour ago, ousted said:

They are not giving me a chance to explain any of these accusations.

 

They can't stop you from explaining yourself, but it might not be a good idea to put anything in writing at this point.

 

 

1 hour ago, ousted said:

Maybe I'm ignorant and don't know what I am talking about but it is my understanding that they can not keep me from having a vote on business decisions.

 

You have the rights of a shareholder.  Shareholders do not generally vote on day-to-day business operations.  Rather, shareholders typically do nothing more than elect the directors of the corporation, and the directors hire the officers to handle the day-to-day operations.  As I noted previously, we haven't read your corporation's by-laws, so we don't know if your corporation is set up in any sort of unusual way.

 

I strongly encourage you to consult with a local attorney.  You certainly do have rights as a shareholder, but no one can intelligently advise you about those rights without reviewing the corporate by-laws.  You should also discuss the impact of the credit card charges on your rights as a shareholder going forward.

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Any employee who charges $8-10K of personal expenses on a company credit card can legally be terminated. They don't have to prove you did it, though you seem to admit they are not incorrect in their belief. They also do not have to share that proof with you.

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Look, all this "can they fire me" and "they haven't given me a chance to explain myself" stuff is irrelevant.  Without a contract or collective bargaining agreement you are an employee at will.  President and CEO's of corporations are employees (as well as officers).  If the board of directors is unhappy about the president or CEO they can fire him for any reason or for no reason at all.  It doesn't matter if you did or did not misuse a company credit card.

 

Something happened to cause the other five people decide it was time for you to go.  The sudden urge to examine the credit card transactions certainly arose for something other than a suspicion that you were misusing the credit card.  You have lost the confidence of the other five owners and it is time to move on.  Sorry.

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I know I need to move on.  I accept that, but I am still an equal partner in that business regardless. They can never take that away. They can buy me out, but they can't take that away.

Thanks for your help

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