Question on role
Discussion
Friend of mine is helping 2 people starting up a business while employed. Now she is also stumping up cash to invest in the business too and obviously cannot easily be named as a company director due to likely conflicts of interest with employer. The other people are the company directors.
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
s2driveruk said:
Friend of mine is helping 2 people starting up a business while employed. Now she is also stumping up cash to invest in the business too and obviously cannot easily be named as a company director due to likely conflicts of interest with employer. The other people are the company directors.
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
What is the nature of the conflict of interest? Is she using information from her employer to help the new business, is the new business a competitor or is the conflict simply one of time?Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
s2driveruk said:
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
Yes. Use a Nominee company. I had a couple of 'hidden' shareholders in my company - it's a tiny bit of admin, but means she can be a shareholder and not have her name registered at Companies House or anywhere else.Thoughts?
NDA said:
s2driveruk said:
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
Yes. Use a Nominee company. I had a couple of 'hidden' shareholders in my company - it's a tiny bit of admin, but means she can be a shareholder and not have her name registered at Companies House or anywhere else.Thoughts?
https://www.samedaycompany.co.uk/nominees/
I am not recommending this company, I haven't a clue who they are... just plucked from the web. You'd need to do your own research who to use. But the website gives some useful top-line information.
I am not recommending this company, I haven't a clue who they are... just plucked from the web. You'd need to do your own research who to use. But the website gives some useful top-line information.
s2driveruk said:
Twofold in my view
1. Similar industry to the one she is employed in.
2. Her employment contract has clauses about setting up a business or being named as a director in another business.
Is she actually using information from her current employer ?1. Similar industry to the one she is employed in.
2. Her employment contract has clauses about setting up a business or being named as a director in another business.
You can see how it looks that she is investing money in a company being set up in a similar industry to her employer and is trying to hide that fact.
Nominee is the way to go if it's all above board.
s2driveruk said:
Are there any other legitimate routes she could take
s2driveruk said:
1. Similar industry to the one she is employed in.
2. Her employment contract has clauses about setting up a business or being named as a director in another business.
In word; no!2. Her employment contract has clauses about setting up a business or being named as a director in another business.
There are plenty of ways she could hide her name from the investment which in itself is not illegal but the reason for doing so puts her in breach of her contract of employment.
If her employer were to ever find out they would have the right to dismiss her instantly whilst throwing the book her way too.
So, if she wants to proceed, she needs make peace with the fact that she is deliberately and knowingly breaching her contract and what the ramifications would be should the matter ever come to light. It will not be pretty.
If she’s happy with that, then whatever way she hides her identity, a written agreement needs to exist that explains what’s being invested and the extent of any financial liability that may exist.
mr_spock said:
Can't she be an investor without being a director? Two separate things.
Yes she can but the OP mentions she is helping set the business up so regardless of whether she's a Director or just an investor doesn't change the fact that she's in breach of her contract of employment. s2driveruk said:
Friend of mine is helping 2 people starting up a business while employed. Now she is also stumping up cash to invest in the business too and obviously cannot easily be named as a company director due to likely conflicts of interest with employer. The other people are the company directors.
Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
Sketchy. Do that at my place and not declare it and you’d be summarily dismissed. Straight to gaol, do not pass go. Are there any other legitimate routes she could take to be recognised without being named at companies house? I have stressed there should be some form of founders agreement too if money is being invested so there is some formality to this whole thing...and a route to a return!
Thoughts?
I’d argue she’s not setting up a business or being a director if she invests in someone else’s business. There seems to be no restriction on free advice so long as she’s not taking company data or using her knowledge of the data (such as customer names or pricing) to help them compete. Otherwise she couldn’t talk to anyone about anything she has experience in, nor invest in any business in the sector regardless of how (ISA, pension etc).
Your opinion / argument is irrelevant. The individual in question needs to review their employment contract and internal policies.
To your latter point, there is a difference between investing in private companies vs. listed companies.
Every workplace differs. If you did anything at mine and intentionally failed to declare, straight out the door you go. And that includes forgoing deferred bonuses.
Doesn’t seem worth the risk?!
To your latter point, there is a difference between investing in private companies vs. listed companies.
Every workplace differs. If you did anything at mine and intentionally failed to declare, straight out the door you go. And that includes forgoing deferred bonuses.
Doesn’t seem worth the risk?!
mr_spock said:
I’d argue she’s not setting up a business or being a director if she invests in someone else’s business. There seems to be no restriction on free advice so long as she’s not taking company data or using her knowledge of the data (such as customer names or pricing) to help them compete. Otherwise she couldn’t talk to anyone about anything she has experience in, nor invest in any business in the sector regardless of how (ISA, pension etc).
In the case described by the OP, it doesn't matter whether she's a director or just investing because either is forbidden under her existing employment contract.Even if it wasn't explicitly forbidden it would place her in breach of implied terms and conditions as her interests in both companies would be a conflict of interest. For example.... an opportunity to win some business lands on her desk where she is employed. Her attempting to win this business would be part of her job and is duty bound to pursue it. But at the same time, her investment would become more attractive if the other company won the work and if she didn't try to win it for them, she could be putting her investment at risk.
Investing in businesses via an investment platform, broker or similar is entirely different to the situation here.
The other factor to consider is that the arrangement may well put her in the realms of collusion - something that Trading Standards take a very dim view on with the potential for serious legal ramification.
StevieBee said:
Investing in businesses via an investment platform, broker or similar is entirely different to the situation here.
The other factor to consider is that the arrangement may well put her in the realms of collusion - something that Trading Standards take a very dim view on with the potential for serious legal ramification.
Interesting, thanks. I had a vaguely similar situation where investing via a platform was seen as exactly the same, had to have an exclusion written for it. I hadn't considered the Tranding Standard aspect, always nice to learn!The other factor to consider is that the arrangement may well put her in the realms of collusion - something that Trading Standards take a very dim view on with the potential for serious legal ramification.
If she genuinely has nothing to hide, I would suggest she seeks a meeting with her manager/ director for an informal discussion about it to see how they feel, if they are supportive then get it written up, if not, don’t do it - or resign and do it if she doesn’t have an overhang clause.
You can be a shareholder in a business without being a director and therefore not on companies house.
If she has nothing to hide I would clear this with the employer as it is risky both for her employment and for the business.
If I was her employer and found she had helped to stand up a competitor, I would possibly fire her, sue her and sue the other company
Not saying this has happened, but tread carefully.
If she has nothing to hide I would clear this with the employer as it is risky both for her employment and for the business.
If I was her employer and found she had helped to stand up a competitor, I would possibly fire her, sue her and sue the other company
Not saying this has happened, but tread carefully.
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