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10/08/2010 12:14:52 PM · #1 |
Hello,
I have a buddy who works for a small family owned corp. It has about 20 employees and they make "boxes". It is well run and has about $15,000,000 / year in sales.
The company is currently run by the President. The president is the mother of two sons who both work for the company. One is the secretary and I think one may be the treasurer or something of that sort.
The mother is going to will (I guess that is what you do) the company to the two sons after her death. It will be a 50/50 split.
Does anyone know if any one of these two can do any harm to the other in the company? For example, how far can one go to hack away at the other? Does current officer position dictate who will have more power?
My friend has been at this company for 12 years and is getting worried about what is about to come.
Thanks |
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10/08/2010 12:39:40 PM · #2 |
It's likely that one of the sons will buy some of the others interest in the company.
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10/08/2010 12:41:58 PM · #3 |
| im not sure how a 50/50 split works, but if they are concerned they might do a 49/49 split and give 2 shares to a third party, this way neither sibling has a majority control of the company. |
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10/08/2010 12:52:49 PM · #4 |
| I'm sure private corporate structure is similar in the US and Canada. There's nothing an owning partner can do to "buy out" another party's shares in a privately held corporation. The directorship is irrelevant in terms of ownership -- only the controlling interest vis-a-vis shares matters. In a 49/49 split, the share ownership is identical as in a 50/50 split (both own the same percentage of the company). Involving a third party will just be a pain when it comes time to pay dividends, make certain decisions, and so on. In a privately held corporation, share ownership is functionally nominal until one party tries to assert that ownership for whatever reason, generally through counsel. If tough times are ahead, they're probably unavoidable. |
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10/08/2010 01:02:40 PM · #5 |
I agree with Louis in part; if the sons are not on good terms there may be no way to avoid a big bump in the road.
On the other hand, if one son wishes to buy the other out, and the other accepts the terms offered, there should be no legal reason why it cannot happen.
ETA: this is why CEO who wish to avoid these issues spend years developing and implementing succession plans that ensure that the company does not take a hit if family members cannot or will not step up and manage it well.
Message edited by author 2010-10-08 13:05:00. |
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10/08/2010 01:12:58 PM · #6 |
| leave it all to the dog, this is what happens in the movies... |
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