In Skeels v. Suder, a leaving investor of a law office took legal action against concerning the company’s choice to redeem his shares for no factor to consider. No. 21-1014, 2023 Tex. LEXIS 578 (Tex. June 23, 2023). Partners of a law office participated in an investor contract that enabled particular people to act. The resolution specified:
Regardless of the variety of investors, or the variety of shares provided to any investor, Walker Friedman, Jonathan Suder and Michael Cooke, jointly, have actually been entitled, and will continue to be entitled, to take affirmative action on behalf of the Company, and ban any vote or action taken by or on behalf of the Company, and/or by any other investor, whether separately, or jointly.
Id (focus included). The company’s governing files did not deal with redemption, and after the company ended an investor’s work, he did not consent to the creators’ proposed redemption terms. The creators then supposed to redeem his shares at no charge, arguing that a resolution typically licensing the creators “to take affirmative action on behalf of the Company” unambiguously includes redemption. The high court ruled for the lawfirm and declined the leaving investor’s claim concerning the redemption.
Most of the court of appeals verified that under the numerous files, it deserved to do so: “The plain language of the Resolution– an investor contract– broadly enabled Friedman, Suder, and Cooke as the Company’s governing authority to take affirmative action on behalf of the Company; hence, the high court did not err by discovering that the Resolution governed the redemption of Skeels’s shares on the terms determined by the Company’s governing authority.”
The Texas Supreme Court reversed. The court kept in mind that the Texas Organizations Code offers that business shares are personal effects, however an expert corporation might redeem them if the redemption rate and other terms are (1) “consented to in between the board of directors” and either “the investor” or his “individual agent,” (2) “defined in the governing files” or “a suitable contract,” or (3) figured out according to a statutorily licensed “investors’ contract.” Id
The Texas Supreme Court held that:
customizing “affirmative action” with “on behalf of the Company,” the resolution licensed the creators to act the company might take, however it did not make up the leaving investor’s contract that the creators might set redemption regards to their own accord on his behalf. Nor does the resolution itself “specif[y]” any redemption terms. And since the company was not licensed– by statute, governing file, or investors’ contract– to set the redemption terms without the leaving investor’s contract, the resolution did not individually license the creators to unilaterally figure out those terms.
Id