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Hi, my business partner and I met at a property training course a few years ago and met up once or twice. I had been let down by someone else and was keen to find another partner. We have both suffered losses in previous businesses so we felt we could get along having similar experiences. He has the bulk of the capital and works full time in an extremely pressured job. I am working on the business full time.
We spent 5 months researching areas at weekends and planning the plan for our portfolio and after much nagging from me, we finally incorporated 5 months into the relationship as a Limited company 50/50 shareholders. He has another company for a property in Europe and is a high rate taxpayer here. In our Shareholders agreement (which to date has still not been signed) shows the share being divided as such:-
Both to receive 500 each of A shares, B shares are 100 to me and NIl to him, C shares 100 to him Nil to me.This is something I don't understand fully; It was explained but to be honest, I was overwhelmed at the time and have forgotten. There are no articles of association either. I have only put in about £15k in cash and a year's worth of work. We have sourced and renovated a property which was purchased in our Company. I have done all the work to facilitate this although he has done some renovation recently.
The agreement was in the beginning that I put £30k into the business, however, because I have not been paid for the last year, he has said he wont take anything from me and I can use this to live off. He has promised when we commence letting the property out as a holiday home all the profit will be mine for the first year so I can prevent the drain of my savings which is frittering away so quickly!
He has been difficult to work with going off the radar for days and not replying to messages for days at a time. I am concerned about being in business moving forward with him as there are other things that we do not agree upon such as the purchasing of items. We agreed at the beginning I would have responsibilities and he would have his, however some of mine he gets involved in because he wants to monitor my purchasing. He only puts the exact amount of cash into our account needed for things he has agreed to, which is very frustrating when needing to purchase or pay a contractor.
There is also a clause in the agreement that he included (by the way - was not open to a one-off JV for a purchase, it had to be a full on permanent business partnership) the clause reads as follows as an action that needs written consent by both parties ' action shall not be taken in buying any new business or company or make substantial investment in a business that is different or change the nature or scope of the business OR START ANY NEW BUSINESS OR NEW PROJECT. which means if I wanted to purchase a property with someone else I cannot. So if I came across an opportunity to earn some income, I cannot do it.
His funds used for our first purchase is a directors loan is being charged at a loan rate of 8% and he wants half of the profits after the first year, we are making a profit on a rent to rent deal but this being used to renovate and pay the mortgage on the next one. He also is asking for the directors loan to be repaid
I feel vulnerable, there's no certainty in my income so I feel I should not sign this as it shackles me to him. The fact he has constantly avoided signing anything also concerns me. Should I have alarm bells ringing, as there is no written protection in place apart from a filing at companies house with my name as an equal shareholder? he is in no hurry to sign would I be doing myself a disservice just carrying on as is until I find someone else to work with?
Happy to keep the recently purchased property untouched for the long haul as at 57 I have no pension in place another reason for trying to accumulate in this way. Apologies for such a long post!
We spent 5 months researching areas at weekends and planning the plan for our portfolio and after much nagging from me, we finally incorporated 5 months into the relationship as a Limited company 50/50 shareholders. He has another company for a property in Europe and is a high rate taxpayer here. In our Shareholders agreement (which to date has still not been signed) shows the share being divided as such:-
Both to receive 500 each of A shares, B shares are 100 to me and NIl to him, C shares 100 to him Nil to me.This is something I don't understand fully; It was explained but to be honest, I was overwhelmed at the time and have forgotten. There are no articles of association either. I have only put in about £15k in cash and a year's worth of work. We have sourced and renovated a property which was purchased in our Company. I have done all the work to facilitate this although he has done some renovation recently.
The agreement was in the beginning that I put £30k into the business, however, because I have not been paid for the last year, he has said he wont take anything from me and I can use this to live off. He has promised when we commence letting the property out as a holiday home all the profit will be mine for the first year so I can prevent the drain of my savings which is frittering away so quickly!
He has been difficult to work with going off the radar for days and not replying to messages for days at a time. I am concerned about being in business moving forward with him as there are other things that we do not agree upon such as the purchasing of items. We agreed at the beginning I would have responsibilities and he would have his, however some of mine he gets involved in because he wants to monitor my purchasing. He only puts the exact amount of cash into our account needed for things he has agreed to, which is very frustrating when needing to purchase or pay a contractor.
There is also a clause in the agreement that he included (by the way - was not open to a one-off JV for a purchase, it had to be a full on permanent business partnership) the clause reads as follows as an action that needs written consent by both parties ' action shall not be taken in buying any new business or company or make substantial investment in a business that is different or change the nature or scope of the business OR START ANY NEW BUSINESS OR NEW PROJECT. which means if I wanted to purchase a property with someone else I cannot. So if I came across an opportunity to earn some income, I cannot do it.
His funds used for our first purchase is a directors loan is being charged at a loan rate of 8% and he wants half of the profits after the first year, we are making a profit on a rent to rent deal but this being used to renovate and pay the mortgage on the next one. He also is asking for the directors loan to be repaid
I feel vulnerable, there's no certainty in my income so I feel I should not sign this as it shackles me to him. The fact he has constantly avoided signing anything also concerns me. Should I have alarm bells ringing, as there is no written protection in place apart from a filing at companies house with my name as an equal shareholder? he is in no hurry to sign would I be doing myself a disservice just carrying on as is until I find someone else to work with?
Happy to keep the recently purchased property untouched for the long haul as at 57 I have no pension in place another reason for trying to accumulate in this way. Apologies for such a long post!
