I am a director and 25% owner of a S-corp in Arizona. Because of deceptive business practices i would like to remove myself from the business.
The directorship and the ownership are two different things (i.e.you're wearing two different hats there).
Start by reading the operating agreement. It should describe how a manager can resign. I'm not sure if by director, you mean manager. The agreement may address directors and/or managers, hard to say without seeing it.
Very generally speaking, resignation typically involves giving appropriate notice, but, ultimately, the terms of the operating agreement will control.
The ownership is a trickier issue. It is likely governed by the operating agreement as well. One option for you is to sell your ownership to someone else. There are normally restrictions in an operating agreement on how that can be done.
It is a good idea to have proper written documentation of your resignation and/or sale.
I am not your lawyer unless we enter into an engagement agreement in writing. This is general information that is given for legal education only. It is not legal advice, and it may not work for your specific situation. I strongly encourage you to consult with a local lawyer to get legal advice and help with your specific situation at your earliest convenience. I am licensed to practice law in Arizona.
Even if you remove yourself from ownership, that might not insulate you from the things that have gone on such as failure to pay taxes or some labor claims. Also, if you personally guaranteed any loans, you will be responsible for them even after you are no longer an owner. Talk with a lawyer and give that person all the facts to you can get the best advice as to the proper course of action. Bring all the documents that you have as well as any evidence you have of the deception.
Contact one of the local area (Arizona) business attorneys who have answered your question or use the avvo.com FIND A LAWYER tool. That attorney will need to review the agreement you signed and then provide you with a good approach to accomplishing what you want to accomplish.
Mr. Crosner is licensed to practice law in California and has been practicing law in California since 1978. The response herein is general legal and business analysis.. It is not intended nor construed to be "legal advice" but rather it is analysis, and different lawyers may analyze this matter differently, especially if there are additional facts not reflected in the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. I am not your attorney until retained by a written retainer agreement signed by both of us. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. In seeking an attorney on this site, beware of limiting your search to attorneys with a 10 rating, and carefully read the AVVO disclaimer regarding their rating system. There are certain factors that are given great weight which do not necessarily have any bearing on an attorney's experience, abilities, and results with certain types of cases. Accordingly, the rating numbers can be misleading. Also beware of basing your choice on the fee charged, as a low fee, depending on the skill, experience and determination of the specific attorney handling your case, could actually have an inverse relationship to the amount actually put in your pocket.
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