Partnership Gone Bad!

[laclisque]

Need a bit of advice.

One person (A) sell 50% percent of his company to a person ( and they both invested extra money into the business.

Now one person (A) no longer wants to continue because ( is not doing his work, disturb the work flow, do not bring the business he was supposed to bring, do not want to learn, have dyslexia (not mentioned before) etc...The business is not making enough money for two partners.

At first (A) propose to buy ( out, but ( does not agree. ( even propose to (A) to buy his shares but retract.

After some time ( accept to be bought out but threats (A) for a law suit. (A) changes his mind and do not want to buy a business that ( plan to sue and that his not worth the money.

(A) decide to give ( his shares and start a new business ©. ( does not want to wait for the shares to be cancelled. ( lawyer ask (A) to transfer the shares within 7 days or he will sue. (A) do not want to pay taxes on a sale that he would not get money for and lose a consequent amount of money and assets (1,000,000 Baht). Now (A) is really mad at ( and does not want to give away the company to (.

( threaten (A) physically and tell (A) that he will sue and won't wait for the 7 day delay.

The business is making 200000 Baht profit per month.

There is NO partnership agreement.

My questions are..

1) Can person A force the business to be disolved even if person B still wants to continue?

2) If person A does now not want to be bought out, doesn't want to buy out (, but only wants the business to dissolve & start a new business how can it be resolved?

3) Does ( has a case against (A) for selling the company and leaves?

Thank you.

[Sunbelt Asia]

The first thing you need to clarify is whether or not you established bylaws or a partnership agreement when you established the partnership/company. If so, then all of these issues should be covered by that agreement, rules to which you are both bound.

Whenever setting up a business it is always best to do it in a professional business manner rather than rely on friendship to keep things professional. However, if you did not create a partnership agreement or establish bylaws when establishing the company then you may have to rely on what is called "Russian roulette" in order to sell your shares. You will both need to agree that this is an acceptable method to terminating the relationship however.

Russian roulette works this way: Shareholder A makes an offer to buy shareholder B’s shares. If B is not prepared to sell at that price, A is obligated to sell his/her own shares to B at the same price. This is designed to ensure that the original offer by A is a fair one.

This will work if both parties want a simple and effective means of getting the situation resolved fairly. Hiring a business mediator to work the problems out may be your best solution provided you both agree ot abide by the results of the mediation and are both willing to work to resolve the situation.

One of the most important things when establishing a business, either a company or partnership, is to establish ground rules beforehand. Setting up a partnership agreement that details what to do when certain things occur is key to avoiding these kinds of circumstances happening.

There are many things that can cause disputes such as:

* Misunderstandings about exactly what each person is required to do.

* This is compounded by the failure of some to “pull their weight”.

* Failure to discuss the ‘what ifs’ in the beginning.

* Different expectations of different shareholders.

* Excessive remuneration paid to executives who are shareholders.

* As a result, profits available to the other shareholders are reduced.

* Limited access to information about the company’s affairs.

* Minority shareholders end up with their shareholding being diluted.

* Minority shareholders get ‘locked in’ indefinitely, without an exit opportunity.

* Minority shareholders have no involvement in important decisions.

* The majority manage the company poorly.

* The minority have no power to change the management.

* Some of the shareholders get involved in a competing business.

* Deadlocks occur without any deadlock breaking clause.

It’s also worth considering what issues might be unique to your circumstances. And then establish means to mediate these issues in the agreement that everyone must sign before establishing the business.

Sunbelt Asia always recommends to their customers to consider these issues and any others that may arise after the business opens and establish means and methods of dealing with them prior to opening the business so that deadlocks such as yours do not occur.

[sunbelt][/sunbelt]