A 2-partner biz, one partner now has cancer but nothing in contract re sick pay/death

[Vitamin33]

Hello Everyone
My friend is a parter/director in small (T/O about £125K) lettings business, with her having been the 'active' partner who has spent last 10 years building up the business. But tragically she has been told she has limited time left due to many cancers, she's just 66, bless her. Thing is, the contract she has with her partner doesn't say anything about being able to pass her 50% share of the business on to, say, her son, or being able to sell it to a third party. There's nothing about what happens in the event of death either, except for one line, which may cover it, that says : “The Director shall have no claims in respect of cessation of office”. So does this mean when she passes she will no longer be able to perform her duties and will effectively give over her share to her partner? Nor is there anything in the contract about sick pay (it was drafted by a reputable firm not self-created) but she's wondering if she would be entitled to statutory sick pay IF the business could afford to pay it? She's trying to get her affairs in order. She's been told she has about 6 months but that that could be extendeed a bit if the chemo works. Life is so hard for some people. Thanks for any pointers.

[atticus]

Let's start with some basics.

Is this business a partnership or a limited company?

What is the document from which you quoted?

[Vitamin33]

Thanks, Atticus. It's a limited company and I quotes from legal areement signed by both directors.

[Sam101]

It would seem that the partners (Directors of the Ltd Company) each hold 50% share. Unless there are restrictions with the contract regarding sale of shares, then it may be that your friend could legally sell or gift her shares to whoever she wished.

The other Director could retain the shares if they were purchased by him?

It may be best to seek professional advice with the actual contract on this

[atticus]

Does your friend have shares in the company? If so, is Sam's 50% assumption correct?

Sami is correct that shares are an asset that can be sold or transferred, subject to the company's articles of association and the shareholders agreement. The latter may contain provisions relating to the transfer of shares, for example giving the other shareholders a right of first refusal.

How is your friend paid: salary or dividends?

[Vitamin33]

It would seem that the partners (Directors of the Ltd Company) each hold 50% share. Unless there are restrictions with the contract regarding sale of shares, then it may be that your friend could legally sell or gift her shares to whoever she wished.

The other Director could retain the shares if they were purchased by him?

It may be best to seek professional advice with the actual contract on this

Thank you, Sam, good suggestion. I'll ask her to check paperwork to see if just 50-50 share split.

[Vitamin33]

Does your friend have shares in the company? If so, is Sam's 50% assumption correct?

Sami is correct that shares are an asset that can be sold or transferred, subject to the company's articles of association and the shareholders agreement. The latter may contain provisions relating to the transfer of shares, for example giving the other shareholders a right of first refusal.

How is your friend paid: salary or dividends?

Thanks vm, Atticus. I'm not sure how she's paid. I think she prob needs to get professional advice, as looks like this could get quite complicated, but I'll pass on your questions, which will be useful in guiding her as to what she needs to check.

[Vitamin33]

Does your friend have shares in the company? If so, is Sam's 50% assumption correct?

Sami is correct that shares are an asset that can be sold or transferred, subject to the company's articles of association and the shareholders agreement. The latter may contain provisions relating to the transfer of shares, for example giving the other shareholders a right of first refusal.

How is your friend paid: salary or dividends?

Hi again Atticus, I just had a quick look at Companies House and her partner set up the company in 2012 so only his name mentined in Articles, and then she was made a director. And as at 2016 looks like she had 50 shares, with her and his wife having the other 50.

[dslippy]

The section from the agreement appears to relate only to the compenstion whih might accompany the cessation of directorship. That has no overriding connection with share ownership. Attis right - such arrangements are often governed y a shareholders' agreement, but since they can be expensive they are often not created.
The Articles can also govern what happens on the death of a shareholder, but if all else is silent, the shares pass into the estate.

[Vitamin33]

The section from the agreement appears to relate only to the compenstion whih might accompany the cessation of directorship. That has no overriding connection with share ownership. Attis right - such arrangements are often governed y a shareholders' agreement, but since they can be expensive they are often not created.
The Articles can also govern what happens on the death of a shareholder, but if all else is silent, the shares pass into the estate.

Thank you Dslippy, I saw her today and she's going to get some advice. I'll mention to her about share agreement, but money was tight so maybe you're right and one doesn't exist.