Firing a Business Partner

Answer:

As a skilled Delaware County Business Attorney, clients come to me all the time with questions about how a business partner or shareholder can be fired. If you wish to fire your co-shareholder or another partner, it’s best to anticipate a few challenges arising.

The first challenge is that you have a duty of loyalty and a fiduciary duty to your co-partner. This involves acting in both this person’s best interest and in the best interest of the company. Presumably your partner or shareholder has some value to the company for either contribution for marketing or production. The question thus becomes, “What I am going to do to replace this person?”

If you terminate this person, you may not be acting in the best interest of the company. You also may not be acting in their best interest with regard to loyalty to your partner.

Generally speaking, when you breach your fiduciary duty and/or your duty of loyalty, you have a problem in removing a that partner.

This doesn’t mean you can’t remove the person. If their conduct merits termination, they can be terminated as an individual employee of the company, LLC, and/or partnership. The person will no longer receive a salary and you will no longer be getting services from them.

You will, however, still need to evaluate and resolve the issue of the remaining interest the person owns in the company. This will involve establishing his ownership, negotiating the person’s exit, and moving forward from there.

This educational blog was brought to you by experienced Business Lawyer Walter J. Timby. Our law firm proudly represents clients throughout Delaware County, as well as Pennsylvania, the greater Philadelphia area, Delaware and New Jersey.

If you have any questions about how to fire your business partner or shareholder, please contact our Delaware County Business Attorneys for a free case evaluation. Let our experience work for you.