Brock Upham Yost PLLC
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Can you expel a shareholder?

You have a small business, and you sold shares to get capital to start the company. You're not the sole owner or the only one in charge of making decisions. The terms of the contract state that all of the shareholders need to work together to make major business decisions and decide on the direction the company is going to go.

Unfortunately, one of the shareholders refuses to cooperate. They disagree with everything. They never communicate. They miss meetings. You get a hostile sense from them even when they are there. It seems like they're doing everything in their power to hold the company back. Can you expel them?

You able to do so. When a company isn't running smoothly, it can significantly hold it back and keep it from being productive. The other shareholders may agree that you need to cut ties with this individual to move forward.

This can be a complex process, however. Ideally, you will already have a shareholder agreement that lays out how and why you can expel a member. This gives you legal grounds to work from. If not – people often overlook this step – then you may want to try negotiation first. Sometimes, just seeing how serious you are can cause someone to come around.

When all else fails and you need to remove that person from the business relationship, make sure you are well aware of the exact legal steps you need to take. That shareholder does have rights and you must make sure you do things properly to avoid potential ramifications.

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Brock Upham Yost PLLC
616 E. Blanco Rd.
Suite 202B
Boerne, TX 78006

Phone: 830-275-5607
Phone: 830-816-9033
Fax: 830-584-0774
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