Can I close one company and open another to do exactly the same thing?

I own 90% of a company set up to run an internet site. The domain is owned 100% by myself. Can I close the company, distribute the remaining profit and then reopen another company to continue to run the same site? The 10% shareholder in my opinion has not fulfilled their contract.

Los Angeles, CA -

Attorney Answers (3)

Charles Richard Perry

Charles Richard Perry

Business Attorney - Hollister, CA
Answered

This strategy is extremely dangerous. You owe a fiduciary duty to your minority shareholder, which means that you cannot co-opt a corporate opportunity for yourself.

If the minority shareholder has not fulfilled a contract, then they can be sued for breach. Resorting to "self help" in the manner you describe is extremely risky.

You should probably contact a lawyer to help you with this situation. It may be that the breach of contract claim can be settled, and that the settlement include a transfer of stock. Without careful analysis of the situation, however, I can only say that this is theoretically possible.

Intracorporate disputes also must be carefully managed, so that they do not destroy the business. You must be careful here.

Michael Kevin Cernyar

Michael Kevin Cernyar

Internet Lawyer - Long Beach, CA
Answered

This is a corporation question. You do have a fiduciary duty and a duty of loyalty to the minority shareholders. I would advise against this plan.

The response above is not intended as legal advice since it’s impracticable to provide thorough, accurate advice... more
Frank A. Natoli

Frank A. Natoli

Internet Lawyer - New York, NY
Answered

As my colleague notes, this can be problematic.

I would discuss this over with a lawyer in private so all the facts and circumstances can be fleshed out and a best course of action can be reached.

Most of us here, including myself, offer a free phone consult so I would take advantage of that.

Best regards,
Frank
Natoli-Lapin, LLC
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The law firm of Natoli-Lapin, LLC (Home of Lantern Legal Services) offers our flat-rate legal services in the... more

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