Can You Be Fired Or Ousted From A Company In Which You Started? How/Why Is That Possible?

Question

For example, like Martha Stewart, who had to resign from her position as CEO? I don't understand how this is possible, if you started the company, and it even bears your name?

Answer 1

Even if you start a company, you can be ousted if one of these happen:

- the people who own at least 51% of the company vote you out
- your company bylaws give all board members an equal vote and at least 51% of them vote you out

Doesn't matter whether the company's public or private.

Answer 2

Because the company is not private, it's public.

Public means they sold stock to gain financial backing. When a company does this, they have to create a board of directors that are responsible to the stockholders to be profitable. And Martha is now worth $100 million instantly. While Martha Stewart's company may be named for her, she was probably a member of the board. When the legal issues happened, she stepped down from the company to protect it's reputation and distance her personal legal charges from the company. She did the illegal act, not the company.

Also, because she was charged with a questionable stock trade, she can be prevented from holding any position within the company where she could or has access to put the company stock in jeopardy. It's an additional punishment. You will notice people who get in trouble for acts like this end up being brought on as a Consultant. That is a fancy term for "Independant contractor" which means they don't fall under the rules of the company and the company can sever ties without violating any employment laws.

Answer 3

If you start a company and keep it strictly and solely in your name, perhaps as a "your name" doing business as "business name" then only you make decisions. If you sell, or go public, or set up a corporation with a board of directors, then you no longer own the company outright and can be outvoted, and/or fired at the pleasure and will of the ones who now own the company.

Answer 4

If you go public, you've sold the company to shareholders. Now it's not your company, it belongs to someone else. They elect the board of directors, who picks the officers of the company.