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How to get rid of a partner in a business

Asked about 3 years ago - San Jose, CA

Business

I started a corporation with 2 other people at 49% and 2% I have 49% in company. The 49% does the books and I do the sales and everything else and the 2% is there just incase there needs to be a mediator. We recently had an IRS audit and I saw the books which I hadn't seen before and noticed that the partner 49% was taking money out of the company without my knowledge also isn't really able to perform her bookkeeping duites. I have her working out of her home and that is where all the paperwork... is. When I try to contact her via the phone or email I hardly get any response from her. She is also an alcoholic and has been drinking on the job and talking to my vendors and CPA under the influence. I have no employee handbook. I want to get rid of this person as she is damaging my reputation and business. How can I do so? I am having the company appraised. We have no equipment or other employees.

Additional information
I own 51% of a company and my partner has 49%,He has in 8 months almost broke my company.I began this company with all my money that I had saved and 8 months ago I was going through a divorce ,plus surgury .So all in all 8 months I have given him the responsibility .He handled payroll etc.I discovered he hired his wife without my knowledge and the Bookeeper I have is and has said his wife and him took over.I was in much pain with my leg so I was on large doses of medication,He asked me in Dec to redo the share structure as he told me that he did it wrong and he needed to fix it or we would be in serious trouble with audits,I

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Attorney answers (1)

Robert Steven Bernstein

Reputation Level 8

Answered about 3 years ago. Chapter 11 Bankruptcy Attorney in Pittsburgh, PA.

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I'm not a CA lawyer, but some general principles are the same everywhere. There shareholders control the company. They can elect the Directors, who appoint the Officers. Fifty-one percent (you and the 2%) should be able to control the election. The Bylaws have the procedures for calling a meeting and for the election. If you have a meeting and conduct an election. The "new" officers should be able to take control of the books, records, etc. If the 49% doesn't cooperate with the officers (and the directors and the majority shareholders), the state law probably supports a Court intervention and even an Injunction.

See a California lawyer to make sure you follow the rules.

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