The corporation is, for corporate law purposes, a "person" separate from its owners. As such, it owns the assets of the business, including, for example, client lists and employee contracts. A shareholder generally holds legal title to the shares of stock in the corporation only and not to its assets. If a shareholder decides to "leave" a corporation this really means that he is selling his stock (back to the corporation or to another shareholder or to a third party). By selling his stock, a shareholder ceases to be an owner of the corporation. This means that a shareholder who sells his stock cannot, unless the other shareholders agree, take clients and employees with him because the client list and employee contracts remain the property of the corporation.

If the shareholders are in a dispute they are free to settle such dispute by entering into a settlement agreement. The settlement agreement may provide, for example, that the leaving shareholder can take clients and employees. However, this is only if the other shareholders agree to this as part of a settlement. Of course, in negotiating such settlements it is highly advisable for each shareholder to be represented by his own legal counsel.

Elio Palacios, Jr.

Managing Attorney
Palacios Law Office
Telephone: (951) 710-6139
Email: info@PalaciosLawOffice.com
www.PalaciosLawOffice.com

This answer is not legal advice or a solicitation of anyone as a client nor the engaging in the practice of law in any jurisdiction. The answer is merely for information/education and should not be relied upon for legal advice by the original poster or the general public because the facts of the original question may not be complete or may be different from someone else's situation.