• Welcome to the LegalBeagles Consumer and Legal Forum.
    Please Register to get the most out of the forum. Registration is free and only needs a username and email address.
    REGISTER
    Please do not post your full name, reference numbers or any identifiable details on the forum.
  • If you need direct help with your employment issue you can contact us at admin@legalbeaglesgroup.com for further assistance. This will give you access to “off-forum” support on a one-to- one basis from an experienced employment law expert for which we would welcome that you make a donation to help towards their time spent assisting on your matter. You can do this by clicking on the donate button in the box below.

Ltd Co. - Director wants/needs to go!

Collapse
Loading...
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Ltd Co. - Director wants/needs to go!

    Good day all,
    After nearly 5 years of dragging his heels (and me avoiding the obvious issues) my co-director in the Financial Services company we run has decided he wishes to leave.
    Not sure yet whether he's intending to leave the industry altogether or just leave the company we co-own. I have 68% shares he has balance of issued share capital.

    This raises a few questions which I hope someone out there can provide a little nugget of insight into;
    1) How do I stand on the Ltd co. front with him leaving? I haven't the time/resources/patience to form another company and start over due to business interruption etc and consequential costs and loss of income.
    2) The company runs on a minimal value. Our startup "loans" have been withdrawn and what's left is down to my work and effort (99%) What rights does he have regarding company value / pay-offs etc?
    3) My first reaction was to slap him and shake him up a bit .......can I do that without recrimination?
    4) We both take a basic wage plus I take dividends. What requirement is there for a payment or notice period? We've been trading as a Ltd for 4 years at end of this month.
    These are a few of the thousand questions running round at the moment. There will be more but I can't focus too much at present.
    Would appreciate a little information or at least a prod in the right direction.

    Thanks

    CYD ??
    Tags: None

  • #2
    Re: Ltd Co. - Director wants/needs to go!

    May I enquire as to what kind of financial services your company undertakes? (not that it makes much difference, you understand, I'm just curious is all!)
    CAVEAT LECTOR

    This is only my opinion - "Opinions are made to be changed --or how is truth to be got at?" (Byron)

    You and I do not see things as they are. We see things as we are.
    Cohen, Herb


    There is danger when a man throws his tongue into high gear before he
    gets his brain a-going.
    Phelps, C. C.


    "They couldn't hit an elephant at this distance!"
    The last words of John Sedgwick

    Comment


    • #3
      Re: Ltd Co. - Director wants/needs to go!

      Did you have a contract or an agreement with him when he became a director? If there is no contract or agreement he may be taking his clients with him to another company or forming his own company.

      Have you spoken with your accountant (this is very important) yet as he will best know how to proceed with the split and all the finacial aspects. There will also be forms to be completed and to be signed for Companies House as well.




      Originally posted by canny-yet-dippy View Post
      Good day all,
      After nearly 5 years of dragging his heels (and me avoiding the obvious issues) my co-director in the Financial Services company we run has decided he wishes to leave.
      Not sure yet whether he's intending to leave the industry altogether or just leave the company we co-own. I have 68% shares he has balance of issued share capital.

      This raises a few questions which I hope someone out there can provide a little nugget of insight into;
      1) How do I stand on the Ltd co. front with him leaving? I haven't the time/resources/patience to form another company and start over due to business interruption etc and consequential costs and loss of income.
      2) The company runs on a minimal value. Our startup "loans" have been withdrawn and what's left is down to my work and effort (99%) What rights does he have regarding company value / pay-offs etc?
      3) My first reaction was to slap him and shake him up a bit .......can I do that without recrimination?
      4) We both take a basic wage plus I take dividends. What requirement is there for a payment or notice period? We've been trading as a Ltd for 4 years at end of this month.
      These are a few of the thousand questions running round at the moment. There will be more but I can't focus too much at present.
      Would appreciate a little information or at least a prod in the right direction.

      Thanks

      CYD ??

      Comment


      • #4
        Re: Ltd Co. - Director wants/needs to go!

        A director can be removed as a director, I think its a form 288 but I'm not sure.
        Is no longer here

        Comment


        • #5
          Re: Ltd Co. - Director wants/needs to go!

          Hi all,
          thanks for the initial responses. Still battling out the detail (in my own mind at present ..... which doesn't help!) Not much time to spare at present(understandably), hence the late reply.
          At the moment it appears that he has just decided that FS is not his thing especially with the forthcoming changes being foisted on us by the incompetent, incomprehensible and soon to be disbanded FSA.
          As a result, it appears he may just bow out of the business and change direction completely. As an individual, on balance, he probably lacks the dynamic and drive to continue as his experience in the field is not as extensive as mine.
          Initially, his willingness to attend to the minutae of detail in the accounts of the business etc was a benefit but he has not pulled his weight financially in the business throughput recently and this created an inbalance which I am unwilling to carry. As a result, his share of the business has not been covered in the last 18 months except by my efforts.
          I presume from earlier replies that unless he wishes to just walk away and wash his hands that the accountant will have the last say on any financial compensation?
          In intitally establishing the business we did not formally sign a partnership agreement other than those necessary to form the Ltd company and gain authorisation from the FSA so there is no "Director" or employment agreement other than that effectively created as an employee of a Ltd Company.
          My one concern is that he may be able to exercise some pay off for the residual income that derives from the business previously written. As such, all clients belong to the company (that has been our mutual understanding) and residual income from business written has been used collectively to cover the running costs of the business which are currently £19k per annum.
          This is where the business appears most exposed.
          I'm not minded to offer him a payoff if he doesn't ask as he is causing me immense difficulty (and sleepless nights) anyway.
          Apologies for the out-pouring but, hey that's forums for you!!
          Any thoughts would be welcomed.
          C-Y-D

          Comment


          • #6
            Re: Ltd Co. - Director wants/needs to go!

            Am afraid as a share holder of the company he owns those shares in your company, so you would have to pay him the value of those shares, unless he agreed to give you the shares as a gift for which you would have to have written signed documentation stating as such to prevent him claiming the value of his shares at a later date.

            He also has the freedom to sell his shares to a person of his choosing too, in which case you could end up with a new director that you do not know, so you would be best offering him settlement via solicitors to purchase his shares.

            In fact, you would probably be best to seek a solicitor that deals in company law issues.
            Please note that this advice is given informally, without liability and without prejudice. Always seek the advice of an insured qualified professional. All my legal and nonlegal knowledge comes from either here (LB),my own personal research and experience and/or as the result of necessity as an Employer and Businessman.

            By using my advice in any form, you agreed to waive all rights to hold myself or any persons representing myself of any liability.

            If you PM me, make sure to include a link to your thread as I don't give out advice in private. All PMs that are sent in missuse (including but not limited to phishing, spam) of the PM application and/or PMs that are threatening or abusive will be reported to the Site Team and if necessary to the police and/or relevant Authority.

            I AM SO GOING TO GET BANNED BY CEL FOR POSTING terrible humour POSTS.

            The Governess; 6th March 2012 GRRRRRR

            Comment


            • #7
              Re: Ltd Co. - Director wants/needs to go!

              Would the shares (realistically) be of much value to anyone else?
              CAVEAT LECTOR

              This is only my opinion - "Opinions are made to be changed --or how is truth to be got at?" (Byron)

              You and I do not see things as they are. We see things as we are.
              Cohen, Herb


              There is danger when a man throws his tongue into high gear before he
              gets his brain a-going.
              Phelps, C. C.


              "They couldn't hit an elephant at this distance!"
              The last words of John Sedgwick

              Comment


              • #8
                Re: Ltd Co. - Director wants/needs to go!

                Probably not since the company only made 19K in the last 12 months (correction 19k was running costs so the turn over net profit per year is what is relevant here), but still its up to the director what he does with the shares he owns, best bet is to offer him the value of his shares before another person makes him an offer. Plus we see people buying out companies in or facing liquidation/administration all the time, so it's not like someone will not buy the shares if they have an interest in the industry.

                Though given he doesn't know much about the industry, then chances are he has not got someone lined up who is interested in buying the shares. But the longer the OP allows things to go on the nastier it may get and harder it will be to secure ownership of the directors shares. Hence why i believe he should enter discussions with the involvement of solicitors - but obviously have an informal chat with the director first and find out exactly what he is wanting to do.

                In fact if the company is struggling, then the director selling his shares to someone wealthy and willing to invest money and time into the company to turn it into a successful company may be a good thing.
                Last edited by teaboy2; 30th May 2011, 08:01:AM. Reason: correction in brackets
                Please note that this advice is given informally, without liability and without prejudice. Always seek the advice of an insured qualified professional. All my legal and nonlegal knowledge comes from either here (LB),my own personal research and experience and/or as the result of necessity as an Employer and Businessman.

                By using my advice in any form, you agreed to waive all rights to hold myself or any persons representing myself of any liability.

                If you PM me, make sure to include a link to your thread as I don't give out advice in private. All PMs that are sent in missuse (including but not limited to phishing, spam) of the PM application and/or PMs that are threatening or abusive will be reported to the Site Team and if necessary to the police and/or relevant Authority.

                I AM SO GOING TO GET BANNED BY CEL FOR POSTING terrible humour POSTS.

                The Governess; 6th March 2012 GRRRRRR

                Comment


                • #9
                  Re: Ltd Co. - Director wants/needs to go!

                  Originally posted by teaboy2 View Post
                  Am afraid as a share holder of the company he owns those shares in your company, so you would have to pay him the value of those shares, unless he agreed to give you the shares as a gift for which you would have to have written signed documentation stating as such to prevent him claiming the value of his shares at a later date.

                  He also has the freedom to sell his shares to a person of his choosing too, in which case you could end up with a new director that you do not know, so you would be best offering him settlement via solicitors to purchase his shares.

                  In fact, you would probably be best to seek a solicitor that deals in company law issues.
                  Originally posted by teaboy2 View Post
                  Probably not since the company only made 19K in the last 12 months (correction 19k was running costs so the turn over net profit per year is what is relevant here), but still its up to the director what he does with the shares he owns, best bet is to offer him the value of his shares before another person makes him an offer. Plus we see people buying out companies in or facing liquidation/administration all the time, so it's not like someone will not buy the shares if they have an interest in the industry.

                  Though given he doesn't know much about the industry, then chances are he has not got someone lined up who is interested in buying the shares. But the longer the OP allows things to go on the nastier it may get and harder it will be to secure ownership of the directors shares. Hence why i believe he should enter discussions with the involvement of solicitors - but obviously have an informal chat with the director first and find out exactly what he is wanting to do.

                  In fact if the company is struggling, then the director selling his shares to someone wealthy and willing to invest money and time into the company to turn it into a successful company may be a good thing.
                  Has the company been valued? It could be that it is worth less than it owes, in which case, the outgoing director will not be owed any money for the shares he may hold. Shares can (and do) go down as well as up.

                  Purchasing shares in a company does not automatically make one a director of that company, therefore no matter who he sells his shares to (notwithstanding the above) the buyer will simply be a shareholder and not a director.

                  You need to sit down with him and reach an understanding. It may be that the Company’s Articles of Association contain the procedure for settling disputes, although if the Articles provide no answer, s.168 of the Companies Act 2006 provides that any director can be removed from office by an ordinary resolution of the shareholders. However, removing a director who is also a shareholder in the company may amount to unfairly prejudicial conduct giving the removed director grounds for legal redress. Where there is an existing dispute it would be very unwise to remove a director who holds shares in the company from office, which is why I suggest you talk to him first and find out what he wants to do.

                  Do you have a shareholder agreement and if so, what does it say about a shareholder selling his shares?

                  Comment

                  View our Terms and Conditions

                  LegalBeagles Group uses cookies to enhance your browsing experience and to create a secure and effective website. By using this website, you are consenting to such use.To find out more and learn how to manage cookies please read our Cookie and Privacy Policy.

                  If you would like to opt in, or out, of receiving news and marketing from LegalBeagles Group Ltd you can amend your settings at any time here.


                  If you would like to cancel your registration please Contact Us. We will delete your user details on request, however, any previously posted user content will remain on the site with your username removed and 'Guest' inserted.

                  Announcement

                  Collapse

                  Welcome to LegalBeagles


                  Donate with PayPal button

                  LegalBeagles is a free forum, founded in May 2007, providing legal guidance and support to consumers and SME's across a range of legal areas.

                  See more
                  See less

                  Court Claim ?

                  Guides and Letters
                  Loading...



                  Search and Compare fixed fee legal services and find a solicitor near you.

                  Find a Law Firm


                  Working...
                  X