Rowland Heights, CA asked in Business Law for California

Q: Can a director sue if she has 50% but no profit has been generated and she hasn't purchased anything for the business?

She has allocated zero funds. I am looking to dissolve this corp to start a new one without her due to personal issues.

Related Topics:
1 Lawyer Answer
Julie King
Julie King
Answered
  • Monterey, CA
  • Licensed in California

A: Unfortunately, people can and do file lawsuits that have no merit. So, the answer to the first part of your question is: yes, anyone can file a lawsuit for anything he or she wants. The fact that a company has not generated profit or allocated funds is not important. If a law has been violated, the injured party can successfully sue the company that violated the law and get a judgment, which will be good for 10 years -- and can be renewed after that period ends. As to the dissolution, be sure the dissolution complies with all corporate bylaws and agreements (such as a buy-sell agreement.) Also, before a corporation can be dissolved, it must pay off its debts (including any taxes owed) because someone will have to sign under penalty of perjury that the company has no debt. Best of luck to you!

Robert Philip Cogan agrees with this answer

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.