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If a corporation is formed and an officer contributed no money to start the corporation can they still get money when they ask to leave the corporation?
Wiki User
∙ 11y ago
You left a key element out of your question, therefore I will answer it two ways. I hope it makes sense.
1) If you are an officer, but not a stockholder, you get nothing. You can call yourself anything you want - founding member, original crewmember, whatever, but if you own zero stock, you get nothing when you leave.
2) If you are a stockholder, this is the only case in which you are entitled to something. But there are two sets of rules which govern what you can take out. First are the governing bylaws of the corporation about distributions. Second are the state and federal laws which apply in the particular jurisdiction where the corporation was formed.
Lets say you started a company, and received 10% of the stock. After 3 years you decide to go your own way. The money owed to you is precisely 10% of the earnings of the corporation. To go into more detail, it is the 'retained earnings' which build up over the years and taxes have been paid on (C corp by the corporation, S corp by the individual). Also owed to you are 'current earnings' which just means whatever the company has made this year, but has not yet paid taxes on.
However a key point should be made. Just because you leave a company, doesn't mean you stop owning the stock. My guess is that you are not a stock holder otherwise you would be a great deal of rights under the law. If you were just present when they rolled the dice, but didn't get an actual stock certificate, or something in writing to that effect, you have no claims.
Even being a stockholder, unless a company has a formal distribution policy (a plan on how to pay out profits over the years), it could prove difficult to get your money when you leave. So those are all things that should be covered up front in the bylaws of the corporate books. Im pretty sure most if not all basic legal templates cover this for forming corporations.
Good Luck.
Wiki User
∙ 11y ago
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