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Start-ups: How can I protect my interests as a minority shareholder in an incorporated company?
BB
BB
Brian Bagdasarian, CEO, Build A Big Idea Marketing Group & Obii.ai answered:

A few things:

Delaware corporations have a default franchise tax that is calculated on a share basis - if there are 10MM shares, then, even if the company has no revenue or assets, it would still owe the state around 75,000 dollars per year in franchise tax.

The board itself does not control the company, insofar as the board serves at the pleasure of the shareholders - if you are issued 35% of the shares (I'm not sure where you are in that capital stack you provided), then you functionally have almost as much control of the company as the CEO and CTO.

How large is the board itself (according to the Corporate Bylaws)? - Normally a board is an odd number (5, 7, etc), and the chairman of the board only votes when a stalemate exists.

None of you are majority shareholders - a majority shareholder is one that controls, either directly or by proxy, 50.01% of the shares. That doesn't seem to be the case here.

I suggest you have a corporate lawyer look this over - it seems like a sloppy setup right now, with someone at the helm that doesn't really understand the corporate structuring and its impact on a startup.

In reality - an LLC is 100% cool for the stage you are at - and a heck of a lot simpler to deal with.

We can always hop on a call for a few minutes, and I can give you some more feedback, and intro you to a few very strong attorneys that practice in this space.

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