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Can we remove a co-founder when he stops working?
22-Dec-2023 (In Startup Law)
How to kick out a co-founder when he has stopped working on the project and still holds 50% share of the company. The co-founder is involved in other work which is out of scope of the original work and only says that I have invested money and I won't work. He also suspends all the official mail ids of the employees without even giving a notice as he has the login panel access & also has the trademark under his name. He also invokes other share holder to sell him his 10% share so that he gets the majority share of the company & can do whatever he wants to do. Would like to understand the ways where I can continue the company by throwing him out or else I leave the company with the original idea & software as it was my brainchild. We didn't have a founder agreement in place.
Your case is abuse of minority shareholder/ stakeholder. In your case you will need to engage a lawyer to correspond with the co-founder or discuss with him to point out the illegalities that are being committed by him. He further needs to be informed that if he does not cease and desist from such illegalities, you shall be constrained to initiate legal action at his cost and expense.
Your stake and contribution to know how in the company/ undertaking will have a major bearing in the matter.
Your stake and contribution to know how in the company/ undertaking will have a major bearing in the matter.
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Adv. Kawaljit Singh Bhatia
Delhi | 400+ Answers
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Based on the limited facts including the fact that there is founder agreekent and assuming there is no shareholder agreement, you would get any contractual rights to take action against your co-founder..
However, you could file a petition for oppression and mismanagement against the co-founder and seek a prayer to ouster him from his managerial position and further injunct him from obstructing the day to day functions of the company.
Further, co-founder has a right to persuade another shareholder to sell his 10% shares to him, however, he cannot force some to do the same unless such a right is granted vide contract.
Hope the above is helpful. For a thorough opinion it would be required to go through the papers in detail.
However, you could file a petition for oppression and mismanagement against the co-founder and seek a prayer to ouster him from his managerial position and further injunct him from obstructing the day to day functions of the company.
Further, co-founder has a right to persuade another shareholder to sell his 10% shares to him, however, he cannot force some to do the same unless such a right is granted vide contract.
Hope the above is helpful. For a thorough opinion it would be required to go through the papers in detail.
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Adv. Tushar A John
Delhi | 25+ Answers
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You can have a general body meeting of all the shareholders of the company wherein you get the voting done by all the members of the board of directors asking for the ousting of the concerned member. If the board bites in majority for his removal he will be stand suspended with no rights left in the company. Accordingly his shares can be purchased by the other members of the company giving him the monetary value in return. The monetary value can be calculated based on the valuation of the company and hence the worth of the shares.
Or else if your idea is not protected under the IPR regime in the name of the company or in the name of the founder who is creating troublesome situation for all then you can leave the organization with the original idea and none can stop you from doing the same.
Or else if your idea is not protected under the IPR regime in the name of the company or in the name of the founder who is creating troublesome situation for all then you can leave the organization with the original idea and none can stop you from doing the same.
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Adv. Pulkit Prakash
Delhi | 400+ Answers
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