I am 50% owner of an event decor business for 18 years. The last 2 years I told my business partner I wanted to leave the business.We did not have any type of contract written up incase one of us should leave. I finally left in this past October. But I left without selling her my shares or signing a non compete, She changed the locks on the doors, which my name is personally still on the lease, changed passwords to computer programs, email, bank accounts. etc. I offered to come back to work to help her for a while, which she declined. I've tried selling her my shares, which she wont. She has been extremely difficult to deal with & I no longer talk to her & I was offered a position from a competitor and need to work since she has not bought my shares nor have I received dividends. Can I legally work for someone or can she sue me.
It all depends upon the specific provisions of your shareholders agreement, which dictates how your corporation operates.
You may owe a fiduciary duty to the corporation, however, her essentially freezing you out of a business that you still own 50% Iof May mitigate that.
I strongly advise you to speak with a business/corporate attorney to further ascertain your options.
Best of luck.
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Although you did not have a noncompete agreement, you still have fiduciary duties to the Corporation, which might be mitigated by the presumably unauthorized actions taken by your fellow shareholder. You should consult with an experienced Corporate Attorney to assess your situation in light of those competing considerations and formulate an approach to favorably terminating your interests and obligations with respect to the Corporation.
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You run the serious risk of liability if you do this before unfinished business with your corporation and business partner is worked out. Assuming you signed a shareholder agreement, that would be the first place I would look to for resolution. Otherwise, you and your partner need to negotiate a buy-out or some other arrangement in which you divest of your interest, if you in fact intend to end your relationship with this business. As long as you are in partnership with the other owner, you owe to that partner a fiduciary duty of good faith and loyalty. Working for a competitor would violate that duty, absent sanction by the partner, the board of directors or the shareholder agreement. It is not so much the presence or lack thereof of a non-compete that is important here, but rather your ongoing legal relationship to the business and its other owner. Use Avvo's "Find a Lawyer" feature if you would like to consult with counsel about negotiating a lawful and advantageous way out of the corporation. Best regards.
While I agree that you owe a fiduciary duty to the corporation, working for a direct competitor, without more, is not necessarily a violation of that duty. In addition, it sounds as if your partner has taken actions that prevent you from performing your duties to the Corporation.
Even though you have no written Operating Agreement or Bylaws, there are default provisions under the RLLCA that come into play. Ground rules, essentially.
There are also contractual principles at work here such as the doctrine of prior material breach and prevention that appear to weigh in your favor. I recommend strongly that you locate a business/corporate attorney to represent your interests against your partner. It sounds as if the relationship is finished, for all intents and purposes. Therefore, you could petition a court for a partition of the company. A partition is an action in equity - a judicially-forced sale of the business, with each partner taking his or her percentage share of the proceeds, after legal fees and costs are taken off the top.
It is said that in a partition action, nobody wins (except perhaps the attorney), for the following reasons: (1) Under these un-ideal circumstances, no buyer will pay, and you will not receive, fair market value for your shares; and (2) The fees and costs would be substantial.
Another tack would be to engage an attorney to write a letter to your partner requesting confidential mediation or some other alternative dispute resolution technique, with the caveat that if negotiations reach an impasse, you will move for partition and sale of the company.
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