A friend of mine in Pennsylvania and I have established an online sports talk radio network. The site has been operating for two years as a hobby without a signed ownership agreement and now it is starting to get bigger so we decided we needed to make it an official business.
He is basically putting an ultimatum on the table, telling me it's either 51(him)/49(me) or 100 (him). He's trying to take controlling interest in the company and scare me into taking the 49%.
If there is no LLC. currently in place, can he take the 100% and start the company without my name as a member of the ownership agreement?
You and your "friend" had an oral deal of some kind before the talk about paperwork and wonership started, and as I'm sure you know, leaving that not worked out before now leaves you in the situation you're in. The situation you're in now requires you to prove what the original deal was --was it a 50-50 partnership? A 50-50 owned LLC or corporation?
The other documents your business has had to use - such as the registration of the domain name for your online sports talk station, the bank account funding this business, etc. --will probably provide some support for the parties' intent here.
If you can't work this out without the help of your own lawyer, you're going to need to hire one. As I'm sure you know, anyone can do anything, and as long as no one challenges them, they'll pretty much do what they want.
Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to any follow-up comments. If you want to hire me, please contact me. Otherwise, please don't expect a further response. We need an actual written agreement to form an attorney-client relationship. I'm only licensed in CA and you shouldn't rely on this answer, since each state has different laws, each situation is fact specific, and it's impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.
You will need to check with a local attorney, but in my state if two people go into business together for a profit, they are presumed to be splitting profits and losses 50-50, unless one of the parties can prove otherwise.
Legal disclaimer: Mr. Lane is an attorney licensed in the state and federal courts of Colorado. This answer is for general information only and does not create an attorney client relationship between Chris Lane or St.Clair & Greschler, P.C.and any person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.
You had an oral partnership without any specification as to the sharing of profits. Does your partner have any basis to claim that he has more than 50% ownership? If not, he is in violation of his fiduciary duty of loyalty and fair dealing to you as a partner. You should consult a business lawyer about mediating this. Failing that, you may have to file a lawsuit to protect your 50% position. A 49% position with a guy like that will be just endless grief.
DISCLAIMERâ€”This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California. (Bryant) Keith Martin sbbizlaw.com
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