

Co founder problems - testsfo

Person A &#38; B decide to start a company. Both didn't sign any document for the company. Never signed it.<p>A does: business plan, exe summary, ROI, pricing, gives input for the website<p>B Does: All tech work with patent, reg the company with delware state, get bank AC, Gets IRS numbers etc. 
        On the any of the doc, Person A names is not there.<p>A decide to move on to diff direction.<p>So Person B decide to give some stocks to A, Person A rejects saying, needs more numbers of stocks.<p>As a Person A can i file a lawsuite againt person B company?<p>What are the best ways to win the case or based on your experience what / how person B will do for the case?
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ErrantX
My (non legal) advice.

Learn the lesson and move on.

Or rather talk to Person B and try tyo work something out (no threats!).

A lawsuit just sounds an expensive waste unless the company is pulling in a
fortune. As far as I can make out you haven't put an awful lot into the site
(sorry if that sounds harsh but speaking, perhaps, from B's point of view). He
probably see's the code as the be-all-and-end-all of the business and so cant
understand why you value your input so high in comparison (what percentage did
he offer?)

I'd be inclined to forgoe lawsuits unless big money is on the table. And
remember the mistake for next time :)

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bokonist
What percentage is Person B offering? Person A really does not deserve any
shares. If you had signed documents, it would have been proper to vest shares,
and it does not look like Person A has done enough work to warrant vesting. So
Person A should be happy with the shares he recieves, wish Person B the best
luck, and hopes the lottery tickets will be worth something someday. If Person
A files a lawsuit, the chance of the company failing goes from 95% to 100%. So
what's the point?

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checkoutmygenes
> business plan, exe summary, ROI, pricing, gives input for the website

sounds to me like person A didn't do much & should be thankful to get anything

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jacquesm
Well, in my opinion there will not be any winners here, only losers (except
for the lawyers).

But if you want to get what's yours (and to me it looks like a buy-out offer
is the best that is in the cards) it helps if you have as much documentation
as you can find, then visit a lawyer that will take your case on a no-cure-no-
pay basis. Otherwise you might be out a large amount of $ just to find that
you won't get anything at all (or just enough to pay your lawyer...).

It also helps to get an idea of what you think this company is worth. If it is
worth more than several tens of thousands of dollars then you have to explain
why you never had any kind of contract drawn up.

In the current situation, having an argument with your partner is actually a
pretty good moment to figure out where you stand, after all he's still around
to argue with.

Imagine how it would have turned out if one day he'd died and you would have
had to prove to his estate that you own part of it...

Have a man-to-man talk, lay out the land for him, be fair and pay up what's a
reasonable amount (and be reasonable) then go do something else, or
alternatively offer to buy him out.

If there is no friendly response weigh your options and if you think it is
worth it get a lawyer.

good luck, you'll need it.

This will take a lot of time.

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cmos
Person A wasn't on any of the incorporation documents? Sounds like Person A
wasn't paying attention, and just got either a very cheap or very expensive
lesson.

I would negotiate for more shares, but then take what you can and move on. If
this is the way Person B does business, why would Person A have any faith that
it will go anywhere? Especially since Person A is no longer working on the
company and chances are wouldn't have left if it was the next Facebook/google?

If Person A had signed an agreement, it probably would have had a bunch of
stock upfront, but then each of you would have a pile that vests over time, so
that if you had left the day after signing the documents, you wouldn't be
owning 50% of the company and not putting in any time.

Person A decided to move on to a different direction. Person A let the company
be incorporated without their name involved. Person A should move on and let
Person B fumble along.

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enjo
Disclaimer: I'm not a lawyer, and am not providing legal advice. I am,
however, closely related to a partner at a CPA firm who deals with this sort
of fall-out all the time.

The lack of documentation is hugely problematic, and will only be settled by
negotiation or court.

In this case your equity stake in the company is going to be parsed by the
court according to your initial contribution to the company (not total
contribution, INITIAL contribution)... particularly money. They're going to
try and figure out who put money in and when. They'll use that to arrive at an
equity figure and current valuation. This is a really expensive forensic
process, so.. uhm.. be prepared.

There are some pretty interesting tax implications here as well. In some cases
the court will grant additional equity to a founder based on some metric for
amount of work, or expectation of the role at founding. This can have some
interesting tax implications, as the IRS will view that additional equity as
income (and thus the starting capital for the company becomes a huge deal).

That's just the tip of the iceberg here, sadly. I've seen this go in a variety
of directions based on verbal agreements, agreements with folks outside of the
company, and the general mood of the litigators working through this.

One thing you SHOULD talk to a lawyer about is how long you have to make the
claim. Often folks will just sit on the sidelines and wait to see if the
company goes anywhere. Once it does, they THEN move after their 'rightful'
equity as there is some actual cash to be had. Spending thousands (if not
hundreds of thousands) of dollards on a lawsuit for a company that will likely
never make a dime doesn't seem very smart.

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cperciva
_As a Person A can i file a lawsuite againt person B company?_

Aside from exceptional situations (e.g., being declared a vexatious litigant)
you can always _file_ a lawsuit.

From what you've said, though -- and with the standard caution that I'm not a
lawyer, this is not legal advice, and I'm sure I don't know all the details --
I think it would depend on what happened when "Person A & B decide[d] to start
a company". If Person A can show that there was mutual intent to create an
equal partnership, he would probably get something out of a lawsuit; a lack of
paperwork does not invalidate an agreement (provided that Person A can show
that such an agreement existed). It's even possible that a court would decide
that Person B had acted to willfully defraud Person A by incorporating the
company on his own.

Of course, all this would go out the window if Person B could show that the
partnership between himself and Person A had been terminated (either by mutual
agreement, or by abandonment).

Short answer: Go talk to a lawyer, and provide him with far more details than
you've provided here.

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vannevar
If person A truly wants to move off in a different direction, take the stock
and run. Don't waste your time and energy on a lawsuit, particularly a venture
that has no capital. Put it into your new direction.

If you really, absolutely can't get it out of your craw, wait until B's
venture is funded and then sue.

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michael_dorfman
_Person A & B decide to start a company. Both didn't sign any document for the
company. Never signed it._

Uh Oh, Spaghetti-O ! Been there, done that. Somebody's gonna get fucked...

 _As a Person A can i file a lawsuite againt person B company?_

Yes, you can. Of course, your estimated costs and chances of a satisfactory
outcome are questions that only a lawyer can answer. I can tell you (again,
from experience) that it will be long, costly, and painful for everybody
involved (whether you ultimately receive satisfaction or not.)

If you feel you've been wronged, and that you've exhausted all of your other
options, lawyer up.

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keltecp11
I'm not an attorney and I don't know all the facts...but:

Lawsuits = $

Before this snowballs and the attorneys end up being the only ones winning...
why don't you see if the venture succeeds?

Person A (if he was smart) would keep his mouth shut until the venture ends up
making big $... thn he would go to court

Person B (if he was smart) would be flexible with person A and/or create a
vesting schedule where nobody has any stock in the company unless they work on
the company for a year and achieve certain deliverables... if person A does
not achieve any deliverables, Person A's stock does not vest and he has 0%
equity stake in the company.

 _overall_ Don't be greedy...person A or person B... go out for some beers and
just move-on.

