Options for Separating from a Business Partner with a C-Incorporated Company in MD

[tmason]

State: Maryland

[HR][/HR]

Hello,

So, long story short I am wondering about the options from separating from a business partner who isn't working out for the start-up that we have started together in Maryland.

Obviously we have assets but more importantly I have created intellectual property that is of the ownership of the corporation itself (Patents, copyrighted code, etc.)

Ideally the person in question would simply step down and rescind his role but that may be unlikely; so I am seeking advice to see if there is any way separation is possible while either maintaining the company or at least keeping the intellectual property intact such that the product can still be sold, etc.

I hope these questions make sense. I look forward to everyone's feedback.

 

[quincy]

State: Maryland

[HR][/HR]

Hello,

So, long story short I am wondering about the options from separating from a business partner who isn't working out for the start-up that we have started together in Maryland.

Obviously we have assets but more importantly I have created intellectual property that is of the ownership of the corporation itself (Patents, copyrighted code, etc.)

Ideally the person in question would simply step down and rescind his role but that may be unlikely; so I am seeking advice to see if there is any way separation is possible while either maintaining the company or at least keeping the intellectual property intact such that the product can still be sold, etc.

I hope these questions make sense. I look forward to everyone's feedback.

Your partnership agreement does not cover this?

You could buy your partner's share of the business, IP and all. Or you could dissolve the business entirely and split the liabilities and assets (which include the IP) 50/50.

 

[tmason]

Thank you...

Perhaps my agreement does cover this. As mentioned I would prefer to keep the company itself intact so I am interested in the purchasing option.

I assume the other party would have to agree. Is that right?

 

[quincy]

Perhaps my agreement does cover this. As mentioned I would prefer to keep the company itself intact so I am interested in the purchasing option.

I assume the other party would have to agree. Is that right?

It certainly helps if the other party agrees.

 

[LdiJ]

Perhaps my agreement does cover this. As mentioned I would prefer to keep the company itself intact so I am interested in the purchasing option.

I assume the other party would have to agree. Is that right?

I am going to give slightly different advice. If you have a C-corp, its not a partnership. You each own stock in the corporation. Therefore you would need to buy his stock. If he has invested in the corporation he may not want to sell his stock. Another alternative would be for any working shareholder (for example, yourself) to receive a salary for the work that you do, on top of any dividends that the corporation may be able to issue.

 

[quincy]

Oops. I missed the "C-Incorporated" in the title and focused on the "business partner" in the post.

I agree with LdiJ that it is probably best to try to negotiate a stock buy-back and then remove the "partner" according to the procedures detailed in the bylaws or, if there is no removal procedure provided for in the corporate documents, by following Maryland's procedure for removing him as corporate officer.

Here is a link to Maryland's Corporate Statutes (from Rees Broome PC): http://www.reesbroome.com/newsroom/statutes/Maryland Corporate Statutes.pdf

How large is your corporation/how many shareholders own the company?

 

[latigo]

Perhaps my agreement does cover this. . . . . I assume the other party would have to agree. Is that right?

"Perhaps"? "Business partnership"? "C- Corporation"? "I assume"?

Apparently you are so lacking in knowledge as to how this "business venture" is organized and structured as to be incapable of speaking intelligently of it. Before you continue rambling about it I suggest that you become better acquainted.

 

[eerelations]

Perhaps my agreement does cover this.

It either does or it doesn't, there's no "perhaps" about it. Read the agreement.