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Can a Majority Partner Deny Bonuses to Minority Partners and Shareholders?

The answer depends on why the majority partner is taking this action. If the majority partner is denying bonuses to all parties and the reasons for his or her action are justified by the financial performance of the business then this course of action may be permitted.

However, typically, when a majority partner denies or interferes with bonuses there may be a lot more going one. One common way for a majority shareholder, partner or member to force out or squeeze out minority partners is for the majority partner to interfere with compensation and bonuses. Even if the majority partner possesses the "voting right" to stop compensation, his or her actions may be in violation of New York and New Jersey Law. Majority partners cannot withhold compensation for the purpose of forcing out or squeezing out minority partners.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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