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.

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1 Lawyer Answer
Julie King
Julie King
  • 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

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