The time may come for your business to vote out one of its partners, and the NBA's recent scandal may serve as a good lesson.
Donald Sterling, the Los Angeles Clippers owner who has been banned for life and fined millions over racist comments, will likely be forced to sell his team by the NBA, reports NBC Sports.
Take a lesson from the NBA: Make sure your business is prepared to vote out a partner.
NBA Constitution Reveals Ambiguities
Like most large businesses, the National Basketball Association (NBA) has a legal document governing the behavior and treatment of players and owners. The NBA handles these issues in its constitution and bylaws, which includes a procedure for terminating ownership and membership.
The NBA's bylaws state that owners may be terminated by a three-fourths vote of existing owners if they:
The NBA will likely argue that while the constitution does not include a "morality clause" for owners, Sterling's comments did interfere with the NBA's business and contracts with sponsors. But the ambiguity in the constitution could lead to a drawn-out legal battle between Sterling and the NBA.
Ways to Ensure an Easier Vote-Out
If you've chosen a partnership as your business' structure, you'll also want to make sure you have an uncomplicated way to vote out partners.
You can start with a partnership agreement from a pre-paid legal service, but most sample forms will not include the kind of language necessary to protect your business from partner termination troubles.
That's why it pays off to have an experienced business organizations attorney discuss the following clauses with you:
The more exacting you are in your business' bylaws, the less time and money you'll likely have to spend defending a partner's ouster in court.
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