Minority Partners: Can they be Fired From a Partnership?

Minority Partners: Can they be Fired From a Partnership?Whether or not a minority partner can be fired depends upon the rights granted to the other partners by the business’s partnership agreement. If the company does not have a valid partnership contract, it can be difficult to remove the minority partner if he or she will not leave voluntarily.

If the agreement between the partners includes a provision outlining the procedures for terminating a partner, it is important to follow the procedures precisely. If the agreement details the types of actions that can result in termination, confirm that you have evidence supporting the fact that the partner took such actions. If there is notification and voting requirements to enact the termination, follow them exactly. The failure to follow the requirements set forth in the partnership agreement for terminating a partner will likely result in costly litigation.

When a partner is removed from a business, his or her equity interest in the company must be purchased. Even if the remaining business partners forced the minority partner out of the company, they have an obligation to buyout the fired partner’s interest. A partner’s equity interest refers to his or her original investment in the company, plus any capital interest.

If the entity does not have a valid partnership agreement authorizing the partners to terminate another partner, it may be necessary to file a lawsuit to remove the unwanted partner. This type of litigation can be expensive, even if the minority partner embezzled or committed other unauthorized or illegal acts. It can be difficult to legally remove a business partner from a company.

Our business attorneys handle partnership disputes and we can help you. Whether you need assistance negotiating a settlement or filing a lawsuit, we stand ready to protect your best interests.

The Swenson Law Firm is located in Sacramento County and we proudly serve businesses of all sizes from all over the State of California. Contact us today to learn more about how we can assist you with matters such as trademarks, defending lawsuits, business formation, contract negotiations, hiring employees, and protecting your intellectual property. With our years of complex business trial and litigation experience, we are an effective, efficient and affordable choice in representing you at the bargaining table and in the courtroom.

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