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Ask a Lawyer -- Corporations
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Brought to you by MedLawPlus.com®-- Corporate Bylaws and initial board of directors resolution Price: $14.99 (free trial) |
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Question: I am a 50% owner in a domestic corporation with my ex-husband. He stole all our profits and I want to begin to dissolve. My question is this can I go to work for someone else who is in the same line of business and take business prospects with me. We have no money to continue and these jobs will be up for others bids anyway. I will only be working for a salary, not profit. And if so can I do this before our corporation is completely dissolved? I have been making arrangements with our creditors and debtors, He wants to bankrupt, I DO NOT. Is there any hope? Response: Yes, there is hope. The fact that you organized as a corporation as opposed to a partnership or LLC makes the situation more manageable. If you have made up your mind that the current corporation is hopeless, you should resign as a director, officer, and employee immediately. Do so in writing and get a copy to your husband ASAP. I suggest you have some sort of documentation of delivery of the resignation upon your husband: fax receipt and/or send a copy by registered mail (return receipt requested) via the U.S. Postal Service. This should have been done before any negotiation has been undertaken with current customers of the corporation of which you are 50% owner. Hopefully you have not contacted any of the corporation's customers yet. Shareholders of a corporation typically owe no fiduciary duty of loyalty to one another; however, partners (and by court extension of the doctrine in most states, LLC members) do owe a fiduciary duty of loyalty to one another simply by the fact that they are partners. Thus, I think once you terminate your positions as director, officer and employee, then you are free to engage in whatever business you choose. If you remain as a director or officer or employee, a concept called the corporate opportunity doctrine may apply. It basically states that you as an individual cannot compete with the corporation (all business opportunities you come across in its field must go to the corporation). The one problem I can think of is if you have a written employment agreement with the corporation that contains a noncompete clause (and the noncompetition period in the contract extends beyond the date of termination of employment). If you have a non-compete, take it to an Iowa corporate lawyer for an opinion as to its enforceability. In any event, I recommend that you consult with an Iowa corporate attorney ASAP regarding your situation to see if he / she comes up with any issues that are not divulged in the facts given above or that I have missed. Submitted: 2-17-2005; Victoria, Iowa Response: 1-20-2005; JJR Add A Comment |
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