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Solo Director/25% Shareholder of LTD fallen out with other shareholders.

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  • Solo Director/25% Shareholder of LTD fallen out with other shareholders.

    Dear forum,

    I thought I have seen it all, yet here is a new one for me.

    Appologies for the long post.

    Formed a Distribution business with an overseas manufacturer. I knew the manufacturer's founder for a while. The manufacturer has 3 shareholders, all of them became shareholders in the UK business together with me at 25% each. I had a Shareholder vote to amend articles so that supermajority is 80%.

    Because I am in the UK, I became the solo director for the business. 18 months I worked on getting it launched, and after go-live the three of the other shareholders do 180-degree turn and offered me two options
    Option 1. sell your stake for peanuts (less than 10k)
    Option 2. Don't sell but there will be no support to the project anymore (financially and distribution wise). So the business is dead, as it was based on them supplying the goods and providing additional loans for marketing.

    The only assets in the business are a couple of domains, a trademark and an exclusive distribution agreement. The Distribution agreement is with the firm they control, so they pretty much killed that.

    Now they are acting like this is my problem to deal with and that I as a Director have to find the funding to settle all unpaid company debts.

    I would appreciate any advice on the following

    1) if the other three shareholders are also involved in the distributor, do I have any "Conflict of interest" defence to leverage the Distribution agreement and exclude them from trading in this zone without my involvement? I invested 18 months of hard work into this and being shafted.

    2) can they make me responsible for all company debts

    3) can I invoice the company for 18 months of director services, and take the assets remaining after paying off suppliers?

    What direction shall I be looking towards and what advice shall i be seeking? Any suggestions are appreciated.

    Sorry for the long post and thanks in advance for all suggestions.
    Tags: None

  • #2
    Hi LEXC

    Where are the other 3 shareholders based?

    All directors have 'fiduciary duties' i.e. responsibilities to all stakeholders of the business.

    https://companieshouse.blog.gov.uk/2...pany-director/

    Here's some more information (posted for information) -

    https://www.gannons.co.uk/shareholde...-shareholders/


    2) can they make me responsible for all company debts

    The company is responsible for the debts.
    Last edited by echat11; 8th September 2021, 11:36:AM. Reason: CORRECTION INFO

    Comment


    • #3
      Did you take independent legal advice before entering into this arrangement? If not you might wish to do so now. (If you consider what they are offering to buy you out is "peanuts", then it is probably worthwhile getting paid for professional advice rather than rely on an interweb forum.)

      Comment


      • #4
        Originally posted by echat11 View Post

        ...The company is responsible for the debts.
        Assuming that as sole director of the company the OP has not had to give any personal guarantees etc to the company's creditors - if there are any at this stage.

        Comment


        • #5
          I think the last lines sums up what the OP is looking for -

          'What direction shall I be looking towards and what advice shall i be seeking? Any suggestions are appreciated.

          Sorry for the long post and thanks in advance for all suggestions'.

          Comment


          • #6
            I would suggest you get some legal advice on this, as you need to find a safe exist strategy which doesn't leave you exposed to any claims as you are the only Director, especially if you have signed any Personal Guarantees on behalf of the Company during the last 18 months. I can recommend someone if you want to message me.

            Comment

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