Dispute Between Directors of a US Incorporated Company

[Lawyer in India]

What is the name of your state (only U.S. law)? Washington

This question relates to US corporate law. I have a Law Firm in India - Simranjeet Law Associates. I have a client who owns 15% stake in a US Incorporated Company. Now there is a dispute between Indian and US directors because US directors want to raise Venture capital funds from US by misleading accounts in subsidiary company in India. I want to know how my client can prevent this. Also are there any rights under corporate law in US/ Washington that my client has in US incorporated company? Example - right to be director or right to get account statements? Can he stall this act of misguiding prospective venture capital investor?
Thanks

 

[tranquility]

What is the name of your state (only U.S. law)? Washington

This question relates to US corporate law. I have a Law Firm in India - Simranjeet Law Associates. I have a client who owns 15% stake in a US Incorporated Company. Now there is a dispute between Indian and US directors because US directors want to raise Venture capital funds from US by misleading accounts in subsidiary company in India. I want to know how my client can prevent this. Also are there any rights under corporate law in US/ Washington that my client has in US incorporated company? Example - right to be director or right to get account statements? Can he stall this act of misguiding prospective venture capital investor?
Thanks

One only has the "right" to be a director if he wins by a vote of the stockholders under the corporate by laws. One only has a "right" to account statements when the corporate by laws allow. Usually, there is a requirement for an annual report.

I suspect it is the same in India.

 

[latigo]

What is the name of your state (only U.S. law)? Washington

This question relates to US corporate law. I have a Law Firm in India - Simranjeet Law Associates. I have a client who owns 15% stake in a US Incorporated Company. Now there is a dispute between Indian and US directors because US directors want to raise Venture capital funds from US by misleading accounts in subsidiary company in India. I want to know how my client can prevent this. Also are there any rights under corporate law in US/ Washington that my client has in US incorporated company? Example - right to be director or right to get account statements? Can he stall this act of misguiding prospective venture capital investor?
Thanks

If your client wishes to become a director of the corporation, he needs to be elected at an appropriate meeting of the shareholders, annual or special and properly called and noticed. But he better get busy gathering up proxies because his 15% of the outstanding corporate stock even with cumulative voting - and provided it is voting stock - won't make much of splash.

A shareholder's right to access corporate records, when, how and what records may be examined is codified in Section 23B.16.020 of the Washington Revised Code.

Can your client "stall this act of misguiding prospective venture capital investor"?

What "act"? Sounds to me that no resolution by the board has been reached. It is still under deliberation and your non-director client has no voice in that debate. What he needs to do is to work with those directors that object to the proposal and help recruit others in order to vote it down.


As "Deputy Barney Fife" would say, "Nip it in the bud".

 

[Lawyer in India]

Thanks

Thanks latigo and tranquility