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If you are an investor who owns 30% of a business and the founder owns 70%, how do you prevent a situation where the founder decides to always take profits and not reinvest them to grow the business? Eventually, as an example, the founder uses the profits he took to start and focus on another similar business, which he will own 100%. Then leaving the business that you're part of on a plateau.

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    I think this belongs on the Law discussion, since that's what it comes down to -- what the contract is between you and the founder.
    – keshlam
    Commented Nov 26, 2022 at 17:54
  • I’m voting to close this question because it should be migrated to Legal.
    – keshlam
    Commented Nov 27, 2022 at 15:41

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You can't. As a minority shareholder, the majority shareholder can always outvote you.

The only exception would be if the principal shareholder is misusing company money, for example by syphoning money away from one company to another company they own. In that case, you would have to take legal action.

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    Could whoever is running the company (presumably the founder) be sued for not acting in the interests of the company? Commented Nov 26, 2022 at 23:47
  • I disagree. The minority shareholders have legal rights and the majority shareholders cannot hold the company as their private wallet unchecked. There are legal implications, it's not just "I can outvote you".
    – littleadv
    Commented Nov 27, 2022 at 6:33

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