Picture this: your business is growing, but one of your original partners—or shareholders—has quietly stopped showing up. They're no longer involved in day-to-day operations, they're not helping with strategy, and maybe they've even disappeared entirely. But they still own shares. They still vote. They still have a say—technically. This is what many business owners refer to as the "zombie partner" problem: an inactive shareholder who won't walk away but also refuses to contribute.
This scenario is more common than you'd think, especially in small corporations or closely held companies. If you're dealing with it, you're not alone—and there are solutions.
Can You Force a Shareholder Out of the Company?
Short answer: not easily, unless your shareholder agreement gives you a path to do so.
Under Florida law, shareholders generally can't be forced out of a corporation just because they're inactive. Their rights as an owner—voting power, dividends (if any), access to certain company records—don't disappear just because they stop working.
However, if your corporate bylaws or shareholder agreement includes buy-sell provisions or exit clauses tied to performance, abandonment, or extended inactivity, those might offer a legal route. Unfortunately, many businesses don't have these terms spelled out when they form.
What Are My Options If My Business Partner Is No Longer Contributing?
If there's no clear agreement, here are the most common paths you can explore:
1. Buy Them Out: Sometimes, a buyout is the cleanest way forward. If the zombie partner is willing to sell, negotiate a fair price based on the company's valuation and move on. If they're resistant, mediation or third-party valuation might help move things along.
2. Amend Your Shareholder Agreement: If you're early enough in your business journey, consider updating your shareholder agreement to include clearer expectations for partner roles and the consequences of long-term inactivity.
3. Sue for Shareholder Oppression (In Rare Cases): Florida courts may allow a forced buyout or dissolution of the company if one or more shareholders are acting in a way that's harmful to the business or to minority shareholders. This typically requires proof of misconduct, not just passivity. But if the zombie partner is blocking major decisions or interfering without participating meaningfully, this might apply.
Can I Remove a Shareholder Who Doesn't Do Any Work?
This is a common question we get from clients.
Here's the tough truth: shareholding isn't tied to labor. You can't automatically remove someone for not contributing to operations, unless that's explicitly part of your shareholder agreement. This is why well-drafted agreements matter so much—especially when ownership and employment are linked.
If the shareholder is also an employee, there may be grounds to terminate their employment (with proper legal protections and documentation), but their ownership interest will remain unless they agree to sell or a legal route exists to force a transfer.
What Happens to Company Profits When a Shareholder Is Inactive?
Even an inactive shareholder may still be entitled to:
- Dividends or profit distributions (if issued)
- Information rights (like financial records)
- Voting rights (on major corporate actions)
That means your zombie partner can continue to benefit from your hard work—even if they haven't done anything in years. This often leads to tension in small companies, especially when active partners are putting in time and resources while the zombie partner reaps passive rewards.
How to Prevent a Zombie Partner Problem Before It Starts
The best way to prevent a zombie partner is through smart planning. Whether you're forming a new business or already working with partners, these steps can protect you:
- Draft strong shareholder agreements that define expectations and consequences for inactivity.
- Use buy-sell agreements that allow partners to be bought out under specific triggers like resignation, retirement, or failure to meet obligations.
- Define roles and duties clearly, especially when ownership is tied to labor or strategic input.
When Should You Talk to a Business Litigation Attorney?
If a zombie shareholder is actively harming the company—or if you're stuck in a stalemate over critical decisions—it may be time to get legal advice. Our experienced business litigation firm can:
- Review your agreements for potential exit routes
- Negotiate or mediate a buyout
- Represent you in court if necessary
At Ayala Law, we've helped Florida business owners resolve complex shareholder disputes like this—often without needing to go to trial.
You're Not Trapped—You Have Legal Options
Dealing with a zombie partner can be draining, especially when you're trying to move your business forward. But you're not stuck. With the right strategy—and legal guidance—you can take action, protect your business, and restore control.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
