S corp with 2 shareholders and majority holder 51 percent decides to close business
Asked on Jan 04th, 2013 on Business Law - New York
More details to this question:
I am the minority shareholder 49 percent. During the 7 months of operation I was the responsible for 95 percent of all business operations and I was paid a shareholders salary based on 125k yearly..The majority owner was paid a very minimal weekly salary. My question is are shareholders salary considered the same as shareholder distributions? End of year has arrived the majority owner thinks I now will owe her the same salary as a distributions. My understanding is she agreed to minimal salary based on her limited contribution to the business and now the end of year profit are to be split equally between the shareholders, 51 percent and 49 percent Since I have been closed out of the company I plan not to sign a final dissolution until this matter is fully clarified. I also plan on requesting full disclosure of final accounting.
You need a lawyer. You need to have the dissolution done in court to insure you get your deal. The structure here was stupid. You know that and that is why you are in the trouble you are in. A distribution is the profit paid to the shareholders, which is pro rata with shares held. You are demanding extra salary essentially. The 51/49 percentage is going to be a problem for you unless you get some leverage in court.
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