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I am giving my opinion considering the firm as a Private Limited Company.
For appointment of CEO -> 1. Hold Board meeting and pass a resolution for the appointment of CEO; 2. File MGT 14 & DIR -12
By raw basic principles, if the Board majority fires a CEO / majority owner, the CEO would then call for a special meeting of s...
Wazzeer Professional Network
ProfessionalHi, My name is George. My self and my friend opened a partner deed company. And as we want to grow up, we tried two more partners. Those two partners are considered to be partner 3 and partner 4. Partner 2 is my friend. When we had our first talk partner 3 and partner 4 said that they have projects and they want someone to implement it. As we already have a company they joined with us. And they promised to give 25% share as equity in Pvt Ltd. and they took the responsibility for creating Pvt Ltd. As they are having an old Pvt Ltd to claim experience we planned to name change it. The rename happened. Suddenly partner 3 says that he wants to be Managing Director. And he is ready to give me CEO and with the salary too.
I accepted then they added me and Partner 2 as WHOLE TIME Directors. Without equity when we asked they told we should fulfill the share amount. We told we don't have that much money that's the reason we gave our company to you. Then partner 3 gave a solution that he can give credit and he took a blank signed cheque and blank promote sign. As they are close to partner 2 my friend, we both have that. Then also they didn't give our equity. Then we concentrated on our for two months. Then performance issue came. As a CEO I asked some questions to my partner 2 and he started joined with them. One day they blocked my mail id's and took my id's too. They are not allowing me (CEO) inside the office. Suddenly I reported partner 3 he acted as he does not know anything. Then I found that, I recruited a 23 yrs experience guy and he bypassed me by saying bad my experience and they all plan together to open a new company. Ok, then I thank that God atkeast you show their real faces in two or three months. A month passed. Partner 3 called me and said George you have cheques and all right. Pay loss compensation. I told cheques given for a differnt purpose. Then he threatened me with his cousin's name who is an assistant commissioner of police. Like he is his cousin and he can do anything. To buy time to think I told currently I don't have given me some days. Then I am here in kanoon. Please guide me to resolve this issue as they are cheaters. Because of that, some employees got terminated. They made me as a responsible person. I am getting more issues. What type of case I can start. Or let me wait for their reaction.
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Wazzeer Professional Network
ProfessionalI am giving my opinion considering the firm as a Private Limited Company.
For appointment of CEO -> 1. Hold Board meeting and pass a resolution for the appointment of CEO; 2. File MGT 14 & DIR -12
By raw basic principles, if the Board majority fires a CEO / majority owner, the CEO would then call for a special meeting of shareholders at which they would elect themselves, and a majority slate of people loyal to them, to the Board. The Board and interim CEO they hired in the meanwhile could have done all manner of mischief in the meanwhile, so once back in power the CEO and new board would have to reverse or invalidate that.
If the CEO's stock is on a vesting program they would, potentially, lose the right to keep unvested shares after they are fired. In a race between the company's attempt to repurchase shares, and the former CEO's attempt to call a shareholder meeting, the company would win because the repurchase would usually happen immediately on delivering the repurchase notice, whereas shareholder meetings require a couple weeks advance notice. Once under 51% the former CEO would no longer have the majority required to reinstate themselves. And further, there may be voting provisions in a voting agreement, investor rights agreement, stockholder agreement, or Certificate of Incorporation that prevent them from firing the Board in that way. These agreements may also require investor approval, or a shareholder vote, for hiring any new CEO, among other things. All this becomes a chess game, only one where the chess pieces aren't clearly in their squares and the rules are subject to interpretation. Both sides read all the company agreements, review the state laws, consider the politics and economics of the situation (who can afford a lawsuit, what the outcome might be, how it will affect public perception and the investors, etc) and usually figure out the end game without having to go through the actual steps.
Some vesting provisions provide that by merely serving on the Board or as an unpaid advisor a shareholder is deemed a service provider and continues vesting — so that as long as they have a substantial enough share ownership to elect themselves to the board, they're not going to lose their shares in a corporate coup. However, the stockholder agreement may require a supermajority or specific approval to appoint a new CEO. Many other form agreements provide the exact opposite for the same reason, that unpaid board members are not service providers and that a replacement board cannot be put in place to fire a newly-hired CEO, to allow companies to fire their CEO if need be.
If you look at situations like American Apparel or RadiumOne where the Board fired CEOs who were major stockholders, things can get dicey if the CEOs are unwilling to leave, even if clearly unsuitable to continue. Usually, they try vainly to gather some support, make a bunch of ill-advised public statements and threats to sue, and then go off to ruminate somewhere. A shareholder battle almost never happens in practice.
I would be happy to help you in this matter, raise a request by clicking on "Get Your Wazzeer"
over 4 years ago
View answer
Hi, My name is George. My self and my friend opened a partner deed company. And as we want to grow up, we tried two more partners. Those two partners are considered to be partner 3 and partner 4. Partner 2 is my friend. When we had our first talk partner 3 and partner 4 said that they have projects and they want someone to implement it. As we already have a company they joined with us. And they promised to give 25% share as equity in Pvt Ltd. and they took the responsibility for creating Pvt Ltd. As they are having an old Pvt Ltd to claim experience we planned to name change it. The rename happened. Suddenly partner 3 says that he wants to be Managing Director. And he is ready to give me CEO and with the salary too.
I accepted then they added me and Partner 2 as WHOLE TIME Directors. Without equity when we asked they told we should fulfill the share amount. We told we don't have that much money that's the reason we gave our company to you. Then partner 3 gave a solution that he can give credit and he took a blank signed cheque and blank promote sign. As they are close to partner 2 my friend, we both have that. Then also they didn't give our equity. Then we concentrated on our for two months. Then performance issue came. As a CEO I asked some questions to my partner 2 and he started joined with them. One day they blocked my mail id's and took my id's too. They are not allowing me (CEO) inside the office. Suddenly I reported partner 3 he acted as he does not know anything. Then I found that, I recruited a 23 yrs experience guy and he bypassed me by saying bad my experience and they all plan together to open a new company. Ok, then I thank that God atkeast you show their real faces in two or three months. A month passed. Partner 3 called me and said George you have cheques and all right. Pay loss compensation. I told cheques given for a differnt purpose. Then he threatened me with his cousin's name who is an assistant commissioner of police. Like he is his cousin and he can do anything. To buy time to think I told currently I don't have given me some days. Then I am here in kanoon. Please guide me to resolve this issue as they are cheaters. Because of that, some employees got terminated. They made me as a responsible person. I am getting more issues. What type of case I can start. Or let me wait for their reaction.
-
Wazzeer Professional Network
ProfessionalI am giving my opinion considering the firm as a Private Limited Company.
For appointment of CEO -> 1. Hold Board meeting and pass a resolution for the appointment of CEO; 2. File MGT 14 & DIR -12
By raw basic principles, if the Board majority fires a CEO / majority owner, the CEO would then call for a special meeting of shareholders at which they would elect themselves, and a majority slate of people loyal to them, to the Board. The Board and interim CEO they hired in the meanwhile could have done all manner of mischief in the meanwhile, so once back in power the CEO and new board would have to reverse or invalidate that.
If the CEO's stock is on a vesting program they would, potentially, lose the right to keep unvested shares after they are fired. In a race between the company's attempt to repurchase shares, and the former CEO's attempt to call a shareholder meeting, the company would win because the repurchase would usually happen immediately on delivering the repurchase notice, whereas shareholder meetings require a couple weeks advance notice. Once under 51% the former CEO would no longer have the majority required to reinstate themselves. And further, there may be voting provisions in a voting agreement, investor rights agreement, stockholder agreement, or Certificate of Incorporation that prevent them from firing the Board in that way. These agreements may also require investor approval, or a shareholder vote, for hiring any new CEO, among other things. All this becomes a chess game, only one where the chess pieces aren't clearly in their squares and the rules are subject to interpretation. Both sides read all the company agreements, review the state laws, consider the politics and economics of the situation (who can afford a lawsuit, what the outcome might be, how it will affect public perception and the investors, etc) and usually figure out the end game without having to go through the actual steps.
Some vesting provisions provide that by merely serving on the Board or as an unpaid advisor a shareholder is deemed a service provider and continues vesting — so that as long as they have a substantial enough share ownership to elect themselves to the board, they're not going to lose their shares in a corporate coup. However, the stockholder agreement may require a supermajority or specific approval to appoint a new CEO. Many other form agreements provide the exact opposite for the same reason, that unpaid board members are not service providers and that a replacement board cannot be put in place to fire a newly-hired CEO, to allow companies to fire their CEO if need be.
If you look at situations like American Apparel or RadiumOne where the Board fired CEOs who were major stockholders, things can get dicey if the CEOs are unwilling to leave, even if clearly unsuitable to continue. Usually, they try vainly to gather some support, make a bunch of ill-advised public statements and threats to sue, and then go off to ruminate somewhere. A shareholder battle almost never happens in practice.
I would be happy to help you in this matter, raise a request by clicking on "Get Your Wazzeer"
over 4 years ago
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