calnative1964
Junior Member
What is the name of your state (only U.S. law)? California
My father and another employee inheirited a small company after the owner passed away. My father is a minority share owner, with the other employee receiving > 50% of the shares. They decided to liquidate the firm as they were the only two employees left. After selling all the assets, the cash was distributed according to % ownership determined by the shares execpt for $20,000. The lawyer and accountant advised the marjority shareowner to retain the $20K for 3-4 years in case of future actions against the corporation.
The corporation is dissolved, the paperwork filed with the CA Sec of State, etc. My father wants his share of the $20k, now. A few questions:
1) is the retention of the funds by the majority owner legal? The funds are being held in a business bank account in the name of the corporation
2) is there now a problem with the state since the dissolution form indicates that the assets were distributed prior to filing?
3) we suspect that the recommendation to retain the funds is based on the desire of the lawyer and accountant to have ready access to payment should (if/when) a reason for their services occurs. reading california corporate law, it appears there are very few issues except for product liability where a claim can be made. The firm in question has produced very little in the past 5 years. The primary fear here is with potential Federal and State tax liability, which extends up to 10 years. Is this a pointless action?
Would like to get my father his entire share. Any ideas?
Thanks
My father and another employee inheirited a small company after the owner passed away. My father is a minority share owner, with the other employee receiving > 50% of the shares. They decided to liquidate the firm as they were the only two employees left. After selling all the assets, the cash was distributed according to % ownership determined by the shares execpt for $20,000. The lawyer and accountant advised the marjority shareowner to retain the $20K for 3-4 years in case of future actions against the corporation.
The corporation is dissolved, the paperwork filed with the CA Sec of State, etc. My father wants his share of the $20k, now. A few questions:
1) is the retention of the funds by the majority owner legal? The funds are being held in a business bank account in the name of the corporation
2) is there now a problem with the state since the dissolution form indicates that the assets were distributed prior to filing?
3) we suspect that the recommendation to retain the funds is based on the desire of the lawyer and accountant to have ready access to payment should (if/when) a reason for their services occurs. reading california corporate law, it appears there are very few issues except for product liability where a claim can be made. The firm in question has produced very little in the past 5 years. The primary fear here is with potential Federal and State tax liability, which extends up to 10 years. Is this a pointless action?
Would like to get my father his entire share. Any ideas?
Thanks