Full question:
My husband went crazy after the death of his 19 year old daughter. We have an S-Corp and he closed all of our bank accounts and changed the directors of the corp without my knowing. Is this legal? We live in Hawaii.
- Category: Corporations
- Date:
- State: Hawaii
Answer:
The legality of your husband's actions depends on various factors, including whose name the bank accounts were in, the bank’s policies, and the corporation's bylaws. If the accounts were corporate, he may have had the authority as a corporate officer to withdraw funds or close the account, but he cannot do this for personal gain at the expense of the corporation. This could lead to a breach of fiduciary duty.
To establish a breach of fiduciary duty, three elements must be present: (1) a relationship where you trust him and he has a duty to protect your interests; (2) a breach of that duty; and (3) damages suffered by you. Claims can arise in many situations where one party accepts a trust and duty to protect another.
Possible defenses against a breach of fiduciary duty claim include: (1) the statute of limitations has expired; (2) no fiduciary relationship exists; (3) lack of standing; (4) actions were approved after full disclosure; and (5) the business judgment rule, where actions were taken in good faith for the corporation's benefit.
If the accounts were jointly owned personal accounts, one spouse cannot remove the other from a joint account without consent. However, one spouse can close the account and open a new one with the funds. In joint accounts, either spouse can close the account, often depending on who acts first.
The removal of board members is governed by the corporation's articles of incorporation and bylaws, which may outline specific procedures for notice, meetings, and voting. Review these documents to understand the requirements for removing and appointing directors. It’s advisable to consult a local attorney to examine all relevant facts and documents.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.