Director leaving company

[HenryJM]

Mr Pointy said:

Is there no general/legal requirement for a Director to not act against the interests of the company? If he's going to your biggest client & you will lose 80% of your business, that's surely not in the interest of your company.

I'm asking as a general question, it's not an area I have knowledge of.

That's an interesting thought, you are right that there is a fiduciary duty to not act against the company and leaving to work for a customer costing the company money could, perhaps, be a breach of that.

Worth pursuing a little, maybe. Or at least bringing up in conversation on the release of shareholdings....

[gregf40]

Mr Pointy said:

Is there no general/legal requirement for a Director to not act against the interests of the company? If he's going to your biggest client & you will lose 80% of your business, that's surely not in the interest of your company.

I'm asking as a general question, it's not an area I have knowledge of.

Pretty sure he could just resign as a director then do as he pleases.

[prostang]

Hi folks
Thanks for all the replies , will probably sit down with him and try and sort if out as we have been freinds for 30 years so that must count for something.

[Blue One]

You say <directors is leaving to go work for the company we do work for therefore loosing us 80% of our work> does that mean he is responsible for 80% of your clients and revenue or just this other firm can now 'insource' the work it currently gives to your firm across your entire team? The reason I ask is that if he is responsible for 80% of the revenue one of the reasons he is leaving may be that he feels he is getting too little share of the business he generates vis a vis the other two partners. Maybe offering him a higher revenue share (not ownership) may help?

[johnfm]

1). See a good lawyer who specialises in this sort of thing. It may cost you £1k to get some very basic, initial advice - but that will then enable you and the other shareholder/director to make informed decisions. PM me if you want and I will recommend a couple to you.

2) what contract do you have in place with the company that he is going to? If they are 80% of your turnover, I would hope you have some formal contract in place. What termination rights do they have?

3) See (1) above. Get an opinion and some advice from a good lawyer specialising in shareholder/director disputes.

[Hobo]

Would it be possible to issue more shares to the company, thus reducing the percentage held of the shareholder who has left he company.

You currently have 100 shares in total, each shareholder each holding 33 shares, or 33%. If you introduced a further 900 shares, and gave not to the person in question, then his holding would remain at 33 shares, but reduce to 3.3%.

[Googie]

The absence of a shareholders agreement is likely to be an issue here but your strongest position is likely to be around the fiduciary duty to the company - as stated above would suggest legal advice in the first instance