Business Partner Withholding bank information, what are my legal rights?

[melparent]

I recently started a company with 2 other individuals in July. This is the first time I've ever started up anything on my (semi)own. We are all equal 1/3rd co-owners. Myself and one of the other partners opened up a bank account for the business to which she input login information and I requested she send it to me after we left the bank. Well, she never did. I've asked her several times since then to send me the information, and this last time, she actually gave me a look like "well, why do you need it?"

I feel that as a co-owner not only is it my responsibility, because we need to have oversight over each other, but it is also my legal right. Am I right, and do I have any recourse? We've only just started, and I think this business could really flourish as long as we're all transparent with each other about our business dealings.

Thanks!

[Freelancier]

You're 3 months in and you're finding out something important about your partner. I'm also guessing you never did put together a partnership agreement.

You need to call a meeting with all three partners at the same table and hash this out and create a partnership agreement to reflect what you all agree to. Or you need to dissolve the partnership if you can't come to an agreement.

[melparent]

You're 3 months in and you're finding out something important about your partner. I'm also guessing you never did put together a partnership agreement.

You need to call a meeting with all three partners at the same table and hash this out and create a partnership agreement to reflect what you all agree to. Or you need to dissolve the partnership if you can't come to an agreement.



We are in the process of creating our partnership agreement now, and I'm definitely going to make sure that it includes language for transparent financials, but until then?…..

[Freelancier]

Until then, you have a partners meeting and hash things out. If you can't get along well enough with your partners after a mere 3 months, then maybe you have the wrong partners for this business.

[Harold Mansfield]

Anytime anyone asks me why I need access to my own stuff, I'd start getting a little suspicious. If there's no trust between partners, then the partnership is doomed.
JMO of course.

[Paul]

Anytime anyone asks me why I need access to my own stuff, I'd start getting a little suspicious. If there's no trust between partners, then the partnership is doomed.
JMO of course.

I agree. This is suspicious from the start!

Not to sound paranoid but I’ve seen it too many times. That partner is either preparing to steal or is setting herself up as “the” financial head of the company. If she’s not forthcoming now it will only get worse over time.

Either way it’s not good. Nip it in the bud. Set up strict financial oversight/transparency protocols. Require your signature on every check or approval on every invoice, a weekly review of the bank account, a monthly review of the financials. Don’t waver from this, don’t get complacent going forward.

I know this all sounds so paranoid and distrustful but I’ve seen it so many times even among friends and family members.

[tallen]

Are you a signatory to the bank account? It sounds like you went to the bank with her when the account was set up -- did you sign any of the paperwork at the time? If so, then bypass the partner and go to the bank directly to gain online access to the account.

But if you didn't have a partnership agreement in place before opening this account, I question whether the account is really in the name of the business, or whether it is just in the name of that one partner (or the two of you if you signed as well). For example, does the business have a Tax ID number of it's own? That (and a copy of the partnership agreement) is something the bank would likely want in order to open up an account for the business as it's own entity. Otherwise, they would want the social security numbers of any and all co-signors on the account.

BTW, where is the third partner in all of this?

[melparent]

I am a signatory on the account, and it is under our company name, with it's own EIN#. We are currently working on our partnership agreement. Stupidly, I allowed her boyfriend in as the 3rd partner because he offered to fund us through the start up, but that has been spotty as well…..I know, one mistake after another……

[Paul]

With the boyfriend you are going to be odd man out on this deal. Keep in mind that a majority in any corporate entity can dilute the minority unless there is specific language in corporate documents like a non-dilute.

Also,with the usual majority rules standard; you will always be the minority. You need veto power or some mechanism to control them.