Reference no: EM132102079

Chandler, Joey and Ross are college friends who go into business together after they graduate. Being such good friends, they see no need for any type of agreement between them. They decide to open a coffee shop and form a corporation for their business with each of them owning one third of the stock in the corporation. Each of them plans to be active in the management of the coffee shop. Chandler handles the business end of the coffee shop such ordering supplies, dealing with vendors, payroll, handling the physical maintenance of the building, dealing with health inspectors and getting the necessary business permits. Ross manages the staff, does all scheduling and handles all human resource issues. Joey is in charge of the kitchen. None of the three draw a salary from the corporation, but share equally in the company profits, which are distributed as dividends to the three shareholders quarterly. The business is very profitable and paid substantial dividends to the three shareholders in the first year of business. After the first year in business, Chandler and Ross think Joey is performing poorly as kitchen manager and is not really contributing to the business. At the annual shareholders' meeting, Chandler and Ross vote to pass a resolution that discontinues the distribution of dividends to the shareholders, and authorizes positions for 2 paid officers, President and Vice-President, earning $78,000 annually. Chandler and Ross the vote to elect Chandler President and Ross Vice President. Chandler and Ross then offer Joey a job as waiter for $15,000 annually, plus tips. Since he is no longer receiving dividends, Joey decides to get out of the business and sell his shares to Monica. Ross and Chandler claim that Joey cannot sell his shares without their approval because their business is a close corporation. What advice would you give Joey as to his rights given these facts?