Shareholder to close down company?
Discussion
Hi,
I've posted some questions about companies and directors on PH before - a hunt through my posting history will find them quickly enough. Here's another (related) question.
If shareholders are unhappy about the way that a company is being run then what options are open to them to close the company down?
A bit of googling suggests that a DS01 form to close a company at Companies House needs to be signed by a majority of the directors, or both directors if there are two of them.
OR the shareholders can petition to have a company closed, provided that 75% or more of them do the petitioning.
If you only have 40% of the shares and one director then what options are open to have a company closed down?
Thanks.
I've posted some questions about companies and directors on PH before - a hunt through my posting history will find them quickly enough. Here's another (related) question.
If shareholders are unhappy about the way that a company is being run then what options are open to them to close the company down?
A bit of googling suggests that a DS01 form to close a company at Companies House needs to be signed by a majority of the directors, or both directors if there are two of them.
OR the shareholders can petition to have a company closed, provided that 75% or more of them do the petitioning.
If you only have 40% of the shares and one director then what options are open to have a company closed down?
Thanks.
2Btoo said:
Eric,
40% would like to have the company closed down, and one of the two directors.
The other director and 60% of the shareholders don't.
All advice welcomed - thanks!
I look at this simply40% would like to have the company closed down, and one of the two directors.
The other director and 60% of the shareholders don't.
All advice welcomed - thanks!
Unless the shareholders have different classes of shares with different rights etc and assuming the shareholders agreements allow voting on a majority basis, you would lose the vote to close it down.
Surely if 40% of shareholders want out, then they sell their shares to the other shareholders?
The more complex view depend on how the company was set up, what the rules governing shareholders and directors are.
This all begs the question - why? Is the company trading insolvently or illegally?
2Btoo said:
Eric,
40% would like to have the company closed down, and one of the two directors.
The other director and 60% of the shareholders don't.
All advice welcomed - thanks!
The power lies in who holds the shares. Votes are done on a share basis. If one person owns 98% of the shares and two people own 2% of the shares - the person holding the 98% will always outvote the other two.40% would like to have the company closed down, and one of the two directors.
The other director and 60% of the shareholders don't.
All advice welcomed - thanks!
You need to explain the precise shareholding situation to enable us to tell you if you can force the closure of the company.
Chaps,
Thanks for the answers. More background is in two threads which I have posted on here in months previously, links to follow;
https://www.pistonheads.com/gassing/topic.asp?h=0&...
and
https://www.pistonheads.com/gassing/topic.asp?h=0&...
A brief summary:
- Company has two directors, both siblings, let's call them Q and Z. Both are in later life.
- Sibling Z has three (adult) kids, sibling Q has two (adult) kids
- Z's side of the family hold 60% of the company shares between them, Q's side hold 40%.
- As far as I am aware, the shares are all equal and there is no shareholders agreement
- The company has made no significant profit in the last 25 years (<£1500/year on average). It has assets worth in excess of £1m, mainly arable land, and the business is renting out this arable land to tenant farmers.
- Z and their side of the family want to carry on the business for historic family reasons. Q and their side of the family want to take their money out and do something else with it. Z and their side cannot afford to buy out Q's side of the business.
- We are trying to divide the company by means of a 'share capital reduction demerger', allowing two new companies to be formed tax efficiently with the current assets split between them in the 60:40 ratio. We have an accountant and lawyer who are working on it. The aim is that once the split has happened then the 40% that goes to Q and family will be sold and the money used for other things.
The problem is that Z is doing a number of things which are undesirable; trying to claim a large lump sum of money for 'work done' and refusing to proceed with the demerger until this has been paid. ('Large lump sum' is significantly >£100,000.) He has also tried to make a grab for the contents of the company bank account as well, claiming ownership of it.
Q's side is not happy with this and doesn't know what options are open to them as it seems that they are (to borrow JeffreyD's phrase) getting a good pumping. One idea that was suggested is that if we can force the company to dissolve then we can precipitate a sale of the assets and divide the income(/profit) in line with the shareholding. Tax would be considerable but it would be financially better for Q's side than to pay the amount that is being demanded.
To answer specific questions:
The 40% shareholder/director ('Q') is owed a few tens of thousands by the company but I understand that there is enough in the company bank account to repay this. If not then the company could sell assets to repay it.
All shares are of the same class, same rights, no shareholders agreement (as far as I am aware).
Z's side don't have enough money to buy out Q's side. (This would be the tidy, clean and neat solution but isn't an option).
Company is close to the line in terms of solvency in that it never has much money and has turned in a miniscule profit over the last 25 years. Many years it has made a loss, some years it has made a profit of a couple of grand. I don't think it is trading illegally.
In short, what options are open to Q's side, other than to take a good pumping? I am very happy to hear suggestions on here but if someone can offer professional advice (with a price tag attached) then we're happy to pay. As I said, we have a lawyer and solicitor who are handling the demerger but I am not quite sure how proactive they are. They are also being very careful not to favour either Q's side or Z's side in their advice, choosing to remain scrupulously impartial. They are happy to put in place any agreement we can come up with but are repeatedly saying that "you need to reach agreement". Q's side need some clear assistance with options that are open to them.
Thanks for your help and advice thus far.
Thanks for the answers. More background is in two threads which I have posted on here in months previously, links to follow;
https://www.pistonheads.com/gassing/topic.asp?h=0&...
and
https://www.pistonheads.com/gassing/topic.asp?h=0&...
A brief summary:
- Company has two directors, both siblings, let's call them Q and Z. Both are in later life.
- Sibling Z has three (adult) kids, sibling Q has two (adult) kids
- Z's side of the family hold 60% of the company shares between them, Q's side hold 40%.
- As far as I am aware, the shares are all equal and there is no shareholders agreement
- The company has made no significant profit in the last 25 years (<£1500/year on average). It has assets worth in excess of £1m, mainly arable land, and the business is renting out this arable land to tenant farmers.
- Z and their side of the family want to carry on the business for historic family reasons. Q and their side of the family want to take their money out and do something else with it. Z and their side cannot afford to buy out Q's side of the business.
- We are trying to divide the company by means of a 'share capital reduction demerger', allowing two new companies to be formed tax efficiently with the current assets split between them in the 60:40 ratio. We have an accountant and lawyer who are working on it. The aim is that once the split has happened then the 40% that goes to Q and family will be sold and the money used for other things.
The problem is that Z is doing a number of things which are undesirable; trying to claim a large lump sum of money for 'work done' and refusing to proceed with the demerger until this has been paid. ('Large lump sum' is significantly >£100,000.) He has also tried to make a grab for the contents of the company bank account as well, claiming ownership of it.
Q's side is not happy with this and doesn't know what options are open to them as it seems that they are (to borrow JeffreyD's phrase) getting a good pumping. One idea that was suggested is that if we can force the company to dissolve then we can precipitate a sale of the assets and divide the income(/profit) in line with the shareholding. Tax would be considerable but it would be financially better for Q's side than to pay the amount that is being demanded.
To answer specific questions:
JeffreyD said:
Does the company have a shareholder agreement? There should be a mechanism for resolving disputes in there.
Do any of the 40% director/shareholders hold any debt with the company?
All in all the 40% need to tread carefully as they could well end up with a pumping.
No shareholder agreement that I am aware of. The company was set up in the 1950's and the Mems and Arts date from that time. Do any of the 40% director/shareholders hold any debt with the company?
All in all the 40% need to tread carefully as they could well end up with a pumping.
The 40% shareholder/director ('Q') is owed a few tens of thousands by the company but I understand that there is enough in the company bank account to repay this. If not then the company could sell assets to repay it.
AyBee said:
Why would you rather close the company down realising no value over selling your shares?
We wouldn't. But being able to force the closure of the company would (hopefully) force Z's hand into selling things and distributing the money. blueg33 said:
I look at this simply
Unless the shareholders have different classes of shares with different rights etc and assuming the shareholders agreements allow voting on a majority basis, you would lose the vote to close it down.
Surely if 40% of shareholders want out, then they sell their shares to the other shareholders?
The more complex view depend on how the company was set up, what the rules governing shareholders and directors are.
This all begs the question - why? Is the company trading insolvently or illegally?
Simple is good. Unless the shareholders have different classes of shares with different rights etc and assuming the shareholders agreements allow voting on a majority basis, you would lose the vote to close it down.
Surely if 40% of shareholders want out, then they sell their shares to the other shareholders?
The more complex view depend on how the company was set up, what the rules governing shareholders and directors are.
This all begs the question - why? Is the company trading insolvently or illegally?
All shares are of the same class, same rights, no shareholders agreement (as far as I am aware).
Z's side don't have enough money to buy out Q's side. (This would be the tidy, clean and neat solution but isn't an option).
Company is close to the line in terms of solvency in that it never has much money and has turned in a miniscule profit over the last 25 years. Many years it has made a loss, some years it has made a profit of a couple of grand. I don't think it is trading illegally.
Eric Mc said:
The power lies in who holds the shares. Votes are done on a share basis. If one person owns 98% of the shares and two people own 2% of the shares - the person holding the 98% will always outvote the other two.
You need to explain the precise shareholding situation to enable us to tell you if you can force the closure of the company.
Thanks Eric. That's the clear and precise comment you are known for. I think the shareholding situation is as simple as it appears: all shares are equal, no special classes, no shareholders agreement. What more information can I offer? You need to explain the precise shareholding situation to enable us to tell you if you can force the closure of the company.
In short, what options are open to Q's side, other than to take a good pumping? I am very happy to hear suggestions on here but if someone can offer professional advice (with a price tag attached) then we're happy to pay. As I said, we have a lawyer and solicitor who are handling the demerger but I am not quite sure how proactive they are. They are also being very careful not to favour either Q's side or Z's side in their advice, choosing to remain scrupulously impartial. They are happy to put in place any agreement we can come up with but are repeatedly saying that "you need to reach agreement". Q's side need some clear assistance with options that are open to them.
Thanks for your help and advice thus far.
It's tough as 40% isn't enough to do anything.
£1.000,000 of agri land is what, about 100 acres? Renting for roughly £70/acre. It's obviously a poor business and as the landlord there will be years when maintenance costs exceed income.
What can you do? Go Chinese. The long game looks like the only option. As in, target to bring the siblings from the 60% holding over to your point of view once their figurehead has gone to push up the daisies.
It's unlikely that all three siblings will hold the same sentimental view as their father. You'd only need one to swing things your way and in reality there will probably be at least two who don't want the faff and would rather have the cash in the bank.
£1.000,000 of agri land is what, about 100 acres? Renting for roughly £70/acre. It's obviously a poor business and as the landlord there will be years when maintenance costs exceed income.
What can you do? Go Chinese. The long game looks like the only option. As in, target to bring the siblings from the 60% holding over to your point of view once their figurehead has gone to push up the daisies.
It's unlikely that all three siblings will hold the same sentimental view as their father. You'd only need one to swing things your way and in reality there will probably be at least two who don't want the faff and would rather have the cash in the bank.
DA,
Thanks. It is a poor business which is not being helped by being run very badly.
It seems that your long game view is pretty much the only option. Z's three kids are not involved in the business at all and have no interest in it (and only a very small shareholding) but won't stand against their parent. However the reasons Q's side would like to take the cash is that the opportunity cost is very significant and it'll be easier to sort everything out this side of the demise of Q and Z. However if there are no other options then I guess there are no other options (said with a resigned note in my voice).
Thanks for your input.
Thanks. It is a poor business which is not being helped by being run very badly.
It seems that your long game view is pretty much the only option. Z's three kids are not involved in the business at all and have no interest in it (and only a very small shareholding) but won't stand against their parent. However the reasons Q's side would like to take the cash is that the opportunity cost is very significant and it'll be easier to sort everything out this side of the demise of Q and Z. However if there are no other options then I guess there are no other options (said with a resigned note in my voice).
Thanks for your input.
If you were to call an EGM each year for all shareholders to discuss how to fix the 0.5% return from the £1m of assets and the catastrophic annual loss of shareholder value then you'd almost certainly make it fundamentally clear to all shareholders that the returns on that £1m are disgraceful, bordering on negligence. You don't need to do it with any aggression or negativity but purely from the angle of allowing each shareholder to voice their ideas on how to make larger returns.
By doing that you gently undermine the hold of that one shareholder as all the others will naturally start thinking about all the money they are and have been missing out on. At the very minimum you ensure each shareholder is aware of the value of the land.
As an aside, does the land have any amenities at all? Is it in a good tourist location? Are you aware of the massive eco tourism opportunities in the market? If you're in a good location and you have the right things on your land and in the local vicinity then the revenues from glamping pods etc are monumental. Out here in the Cotswolds, which would be one of the extreme examples, it has been plausible to gross nearly £30k per annum from a suitable pod that cost £50k to install and set up.
There's also other planning permissions to discuss as well as other markets to rent to.
Either way calling an EGM each year or tabling motions for the AGM so as to openly discuss all options in recognition of the terrible returns will ensure that everyone is endlessly aware of their personal annual losses and just how much money that one shareholder has cost them and continues to cost them.
By doing that you gently undermine the hold of that one shareholder as all the others will naturally start thinking about all the money they are and have been missing out on. At the very minimum you ensure each shareholder is aware of the value of the land.
As an aside, does the land have any amenities at all? Is it in a good tourist location? Are you aware of the massive eco tourism opportunities in the market? If you're in a good location and you have the right things on your land and in the local vicinity then the revenues from glamping pods etc are monumental. Out here in the Cotswolds, which would be one of the extreme examples, it has been plausible to gross nearly £30k per annum from a suitable pod that cost £50k to install and set up.
There's also other planning permissions to discuss as well as other markets to rent to.
Either way calling an EGM each year or tabling motions for the AGM so as to openly discuss all options in recognition of the terrible returns will ensure that everyone is endlessly aware of their personal annual losses and just how much money that one shareholder has cost them and continues to cost them.
DA,
Thanks. All good comments.
The problem with the long game is that it is that - long. However the other shareholders don't seem to appreciate the loss that they are making over this period. It has been explained to them that we should be expecting a return of at least 10% on the value but they simply shrug and say that it is good that the land remains in the family. They are very happy to put sentiment over financial gain. I honestly don't know what it would take to shake them out of this; last time I met them I used the words "This is costing us in excess of £100,000 a year" and it didn't seem to have any impact.
The land in question is in a scenic part of the world and comprises a couple of holiday lets as well. However the approach of Z is that The Virus (Z's capitals) is so dangerous that the cottages shouldn't be let until it is over. The notion of doing something as enterprising as setting up a glamping pod would be impossible for them to understand, let alone make it happen.
It is their prerogative to waste their resources and opportunities if they wish. The problem comes when the fortunes of my side of the family are dragged down with them and it appears that there is nothing that we can do about it.
Thanks. All good comments.
The problem with the long game is that it is that - long. However the other shareholders don't seem to appreciate the loss that they are making over this period. It has been explained to them that we should be expecting a return of at least 10% on the value but they simply shrug and say that it is good that the land remains in the family. They are very happy to put sentiment over financial gain. I honestly don't know what it would take to shake them out of this; last time I met them I used the words "This is costing us in excess of £100,000 a year" and it didn't seem to have any impact.
The land in question is in a scenic part of the world and comprises a couple of holiday lets as well. However the approach of Z is that The Virus (Z's capitals) is so dangerous that the cottages shouldn't be let until it is over. The notion of doing something as enterprising as setting up a glamping pod would be impossible for them to understand, let alone make it happen.
It is their prerogative to waste their resources and opportunities if they wish. The problem comes when the fortunes of my side of the family are dragged down with them and it appears that there is nothing that we can do about it.
It's a shame you don't have a shareholders agreement in place but c'est la vie.
As a minority it is possible to apply to the courts to wind up the company but you do need to show that this is necessary as the company cannot continue as is. That said, sometimes the threat of such an action is enough to spur the other side into doing something so could be worth a shot?
I have to say I don't quite follow why you're trying a company demerger - will the two new companies end up as joint owners of the land or are you also splitting the land into two parcels?
EDIT: just re-read one of your replies. If £100k is being demand (presumably by way of loan/capital injection to the company) then does that mean the company is technically insolvent? If so, I'd suggest you have a very easy way to force the wind up of the company, though not ideal by any means as you'll have to involve a liquidator but then at least they are independent and will (or should, at least!) act accordingly.
As a minority it is possible to apply to the courts to wind up the company but you do need to show that this is necessary as the company cannot continue as is. That said, sometimes the threat of such an action is enough to spur the other side into doing something so could be worth a shot?
I have to say I don't quite follow why you're trying a company demerger - will the two new companies end up as joint owners of the land or are you also splitting the land into two parcels?
EDIT: just re-read one of your replies. If £100k is being demand (presumably by way of loan/capital injection to the company) then does that mean the company is technically insolvent? If so, I'd suggest you have a very easy way to force the wind up of the company, though not ideal by any means as you'll have to involve a liquidator but then at least they are independent and will (or should, at least!) act accordingly.
Edited by HootersGsy on Thursday 2nd September 12:38
HootersGsy said:
It's a shame you don't have a shareholders agreement in place but c'est la vie.
As a minority it is possible to apply to the courts to wind up the company but you do need to show that this is necessary as the company cannot continue as is. That said, sometimes the threat of such an action is enough to spur the other side into doing something so could be worth a shot?
I have to say I don't quite follow why you're trying a company demerger - will the two new companies end up as joint owners of the land or are you also splitting the land into two parcels?
EDIT: just re-read one of your replies. If £100k is being demand (presumably by way of loan/capital injection to the company) then does that mean the company is technically insolvent? If so, I'd suggest you have a very easy way to force the wind up of the company, though not ideal by any means as you'll have to involve a liquidator but then at least they are independent and will (or should, at least!) act accordingly.
HoostersGsy, As a minority it is possible to apply to the courts to wind up the company but you do need to show that this is necessary as the company cannot continue as is. That said, sometimes the threat of such an action is enough to spur the other side into doing something so could be worth a shot?
I have to say I don't quite follow why you're trying a company demerger - will the two new companies end up as joint owners of the land or are you also splitting the land into two parcels?
EDIT: just re-read one of your replies. If £100k is being demand (presumably by way of loan/capital injection to the company) then does that mean the company is technically insolvent? If so, I'd suggest you have a very easy way to force the wind up of the company, though not ideal by any means as you'll have to involve a liquidator but then at least they are independent and will (or should, at least!) act accordingly.
Thanks. I am not aware of a shareholder's agreement and neither is Q. Would there be any other way of finding out if there is one? (It wouldn't be registered at Companies House, for instance?)
Demerger: the end of the process (which I don't understand) is that there are two companies, one owned by Z's side and which will own 60% of the original assets and the other owned by Q's side and which will own 40% of the original assets. The two companies are then free to sell their assets as they choose. However the costs to do this demerger are knocking on the door of £30,000 which are sunk already, and Z is now demanding the huge sum of money to proceed. If we don't proceed then the £30k or so is lost.
I'm not sure that I follow your last comment. The large sum that is being demanded would be by means of a payment from one company to another. What is it for a company to be insolvent?
Thanks again.
2Btoo said:
DA,
Thanks. All good comments.
The problem with the long game is that it is that - long. However the other shareholders don't seem to appreciate the loss that they are making over this period. It has been explained to them that we should be expecting a return of at least 10% on the value but they simply shrug and say that it is good that the land remains in the family. They are very happy to put sentiment over financial gain. I honestly don't know what it would take to shake them out of this; last time I met them I used the words "This is costing us in excess of £100,000 a year" and it didn't seem to have any impact.
The land in question is in a scenic part of the world and comprises a couple of holiday lets as well. However the approach of Z is that The Virus (Z's capitals) is so dangerous that the cottages shouldn't be let until it is over. The notion of doing something as enterprising as setting up a glamping pod would be impossible for them to understand, let alone make it happen.
It is their prerogative to waste their resources and opportunities if they wish. The problem comes when the fortunes of my side of the family are dragged down with them and it appears that there is nothing that we can do about it.
The couple of holiday lets throw a very different light on the situation. I mistakenly thought it was just a plot of arable land being rented out to a local farmer!Thanks. All good comments.
The problem with the long game is that it is that - long. However the other shareholders don't seem to appreciate the loss that they are making over this period. It has been explained to them that we should be expecting a return of at least 10% on the value but they simply shrug and say that it is good that the land remains in the family. They are very happy to put sentiment over financial gain. I honestly don't know what it would take to shake them out of this; last time I met them I used the words "This is costing us in excess of £100,000 a year" and it didn't seem to have any impact.
The land in question is in a scenic part of the world and comprises a couple of holiday lets as well. However the approach of Z is that The Virus (Z's capitals) is so dangerous that the cottages shouldn't be let until it is over. The notion of doing something as enterprising as setting up a glamping pod would be impossible for them to understand, let alone make it happen.
It is their prerogative to waste their resources and opportunities if they wish. The problem comes when the fortunes of my side of the family are dragged down with them and it appears that there is nothing that we can do about it.
You'd generally expect a couple of rural holiday let's to have a high occupancy rate and taking the wild assumption of a pair of old worker's cottages then the amount being charged could be as much as £200/night. But even at £100/night and 400 billable nights a year that's a gross income of £40k/annum.
So do you know where the money from the holiday rentals is going? Is this the reason the children of Z are seemingly blaze in regards to the money?
Why is the business running at a loss some years? Are the properties just not being rented or are family members drawing wages for mai te ce work etc?
DonkeyApple said:
The couple of holiday lets throw a very different light on the situation. I mistakenly thought it was just a plot of arable land being rented out to a local farmer!
You'd generally expect a couple of rural holiday let's to have a high occupancy rate and taking the wild assumption of a pair of old worker's cottages then the amount being charged could be as much as £200/night. But even at £100/night and 400 billable nights a year that's a gross income of £40k/annum.
So do you know where the money from the holiday rentals is going? Is this the reason the children of Z are seemingly blaze in regards to the money?
Why is the business running at a loss some years? Are the properties just not being rented or are family members drawing wages for mai te ce work etc?
You may wonder. The income is woefully low and Z doesn't put much flesh on the figures. I need to dive into them a little bit more, but Z does claim quite a lot of expenses - an unreasonably high amount IMHO. You'd generally expect a couple of rural holiday let's to have a high occupancy rate and taking the wild assumption of a pair of old worker's cottages then the amount being charged could be as much as £200/night. But even at £100/night and 400 billable nights a year that's a gross income of £40k/annum.
So do you know where the money from the holiday rentals is going? Is this the reason the children of Z are seemingly blaze in regards to the money?
Why is the business running at a loss some years? Are the properties just not being rented or are family members drawing wages for mai te ce work etc?
The children of Z are simply not interested. They see the place as a nice place to go on holiday and wouldn't be able to afford a holiday elsewhere. Without wanting to be too dismissive of them, they are neither bright nor adventurous. Z is a retired teacher who never seemed to rise beyond basic classroom duties and his three kids are a failed architect with no job, a primary school teacher with numerous kids by different men and someone who lives in Japan with his Japanese girlfriend in a one-room apartment and occasional translation work. I know I am a capitalist b
d but I seem to grasp the notion of money and income in a way that they don't. 2Btoo said:
HootersGsy,
Thanks. I am not aware of a shareholder's agreement and neither is Q. Would there be any other way of finding out if there is one? (It wouldn't be registered at Companies House, for instance?)
Demerger: the end of the process (which I don't understand) is that there are two companies, one owned by Z's side and which will own 60% of the original assets and the other owned by Q's side and which will own 40% of the original assets. The two companies are then free to sell their assets as they choose. However the costs to do this demerger are knocking on the door of £30,000 which are sunk already, and Z is now demanding the huge sum of money to proceed. If we don't proceed then the £30k or so is lost.
I'm not sure that I follow your last comment. The large sum that is being demanded would be by means of a payment from one company to another. What is it for a company to be insolvent?
Thanks again.
SHAs are private so unless one of you has a copy there likely isn't one.Thanks. I am not aware of a shareholder's agreement and neither is Q. Would there be any other way of finding out if there is one? (It wouldn't be registered at Companies House, for instance?)
Demerger: the end of the process (which I don't understand) is that there are two companies, one owned by Z's side and which will own 60% of the original assets and the other owned by Q's side and which will own 40% of the original assets. The two companies are then free to sell their assets as they choose. However the costs to do this demerger are knocking on the door of £30,000 which are sunk already, and Z is now demanding the huge sum of money to proceed. If we don't proceed then the £30k or so is lost.
I'm not sure that I follow your last comment. The large sum that is being demanded would be by means of a payment from one company to another. What is it for a company to be insolvent?
Thanks again.
I'm afraid I don't see what you're achieving with a demerger - you'll have a new company which is a joint owner of the land. While you are technically capable of selling your partial interest in the land you're not really any better off than had you just sold the 40% shareholding you had previously as who wants to buy a 40% share in some land? You'll also still have to deal with the other half of the family as presumably by being a 40% land owner you'll be entitled to 40% of the income etc.
You might need to give some more detail re: the £100k. I assumed it was money spent/committed by the existing company. If a company is insolvent it means it is unable to pay its bills as they come due. The directors of an insolvent company commit an offence if they continue to trade. If the company were insolvent it would be very easy to get the company into liquidation in order to achieve the sale of the land as you want. But, without knowing all of the detail it is difficult to comment much further.
One of your other comments about a director(?) claiming ownership of a company bank account as his is just truly worrying. Directors duties are quite clear in law, and treating a company's assets as your own is rather frowned upon.
2Btoo said:
You may wonder. The income is woefully low and Z doesn't put much flesh on the figures. I need to dive into them a little bit more, but Z does claim quite a lot of expenses - an unreasonably high amount IMHO.
The children of Z are simply not interested. They see the place as a nice place to go on holiday and wouldn't be able to afford a holiday elsewhere. Without wanting to be too dismissive of them, they are neither bright nor adventurous. Z is a retired teacher who never seemed to rise beyond basic classroom duties and his three kids are a failed architect with no job, a primary school teacher with numerous kids by different men and someone who lives in Japan with his Japanese girlfriend in a one-room apartment and occasional translation work. I know I am a capitalist bd but I seem to grasp the notion of money and income in a way that they don't.
It does seem to be an odd situation. Z's children all seem like people who need money and would be extremely keen to get it. That does suggest that there is maybe another monetary payoff taking place. The children of Z are simply not interested. They see the place as a nice place to go on holiday and wouldn't be able to afford a holiday elsewhere. Without wanting to be too dismissive of them, they are neither bright nor adventurous. Z is a retired teacher who never seemed to rise beyond basic classroom duties and his three kids are a failed architect with no job, a primary school teacher with numerous kids by different men and someone who lives in Japan with his Japanese girlfriend in a one-room apartment and occasional translation work. I know I am a capitalist b
d but I seem to grasp the notion of money and income in a way that they don't. As a family unit they probably see that 60% as 100% which in some ways it is.
If you've already begun the process of divesting 40% of the assets how has it cost so much to date? Also, who gets the properties on the land etc?
HootersGsy said:
SHAs are private so unless one of you has a copy there likely isn't one.
I'm afraid I don't see what you're achieving with a demerger - you'll have a new company which is a joint owner of the land. While you are technically capable of selling your partial interest in the land you're not really any better off than had you just sold the 40% shareholding you had previously as who wants to buy a 40% share in some land? You'll also still have to deal with the other half of the family as presumably by being a 40% land owner you'll be entitled to 40% of the income etc.
You might need to give some more detail re: the £100k. I assumed it was money spent/committed by the existing company. If a company is insolvent it means it is unable to pay its bills as they come due. The directors of an insolvent company commit an offence if they continue to trade. If the company were insolvent it would be very easy to get the company into liquidation in order to achieve the sale of the land as you want. But, without knowing all of the detail it is difficult to comment much further.
One of your other comments about a director(?) claiming ownership of a company bank account as his is just truly worrying. Directors duties are quite clear in law, and treating a company's assets as your own is rather frowned upon.
Thanks. I'm afraid I don't see what you're achieving with a demerger - you'll have a new company which is a joint owner of the land. While you are technically capable of selling your partial interest in the land you're not really any better off than had you just sold the 40% shareholding you had previously as who wants to buy a 40% share in some land? You'll also still have to deal with the other half of the family as presumably by being a 40% land owner you'll be entitled to 40% of the income etc.
You might need to give some more detail re: the £100k. I assumed it was money spent/committed by the existing company. If a company is insolvent it means it is unable to pay its bills as they come due. The directors of an insolvent company commit an offence if they continue to trade. If the company were insolvent it would be very easy to get the company into liquidation in order to achieve the sale of the land as you want. But, without knowing all of the detail it is difficult to comment much further.
One of your other comments about a director(?) claiming ownership of a company bank account as his is just truly worrying. Directors duties are quite clear in law, and treating a company's assets as your own is rather frowned upon.
SHA = shareholders agreement? If so then I agree.
I'm probably not explaining the Demerger well. As I understand it then at the outset you have a quantity of assets which is owned entirely by one company, whose shares are owned in a 60:40 ratio. Selling these shares other than to other existing shareholders would not be possible for the reasons you give.
The demerger carves the existing assets up in a 60:40 ratio. After the Demerger you have two separate companies, one of which wholly owns 40% of the original assets and is owned entirely by the shareholders who owned the 40% share of the original company. The other company wholly owns 60% of the original assets and is owned entirely by the shareholders who owned the 60% share of the original company. Each of these two subsequent companies can then sell their assets as they choose and distribute the money from the sale between the shareholders.
In order for this demerger to go ahead then all parties need to agree to it. Z is demanding a very hefty chunk of cash to be paid from one of the new companies to the other new company for him to agree to the demerger, and is badging the hefty sum of money as 'payment for work done in the last 20 years.'
The current company who owns all the assets has bills that exceed the amount of cash in the bank and they currently exist in the accounts as loans from the directors. However the size of these liabilities is much much smaller than the value of the assets the company owns, so I doubt that it is insolvent.
That Z should consider the cash in the company bank account as being his is just one of the examples of poor directorship. I think that he is out of his depth and has been allowed to remain so for far too long.
DonkeyApple said:
It does seem to be an odd situation. Z's children all seem like people who need money and would be extremely keen to get it. That does suggest that there is maybe another monetary payoff taking place.
As a family unit they probably see that 60% as 100% which in some ways it is.
If you've already begun the process of divesting 40% of the assets how has it cost so much to date? Also, who gets the properties on the land etc?
DA, As a family unit they probably see that 60% as 100% which in some ways it is.
If you've already begun the process of divesting 40% of the assets how has it cost so much to date? Also, who gets the properties on the land etc?
Thanks again.
The history probably explains things; the whole estate was owned by Z's and Q's parents and has been formed into a limited company and left in this state in their well. The difference in the shareholdings is down to the fact that Z had more children than Q did.
Z has run it since then and had little input from anyone else. It's now, when Z and Q are both considering their mortality (both in their late 70's) that plans are being made for the next generation. Yes, I think that your comment about Z seeing it as all his is probably pretty accurate.
Cost of the division process to date is around £30k, which will be lost if the process doesn't proceed. If it does proceed to completion there will be around another £10k to add on top.
The properties on the land are part of the assets of the company as it currently stands and would therefore be divided up as part of the division process.
The essence of this thread is to find out whether there are any other options for Q's side. We are happy to pay for professional advice if anyone can recommend a lawyer who specialises in this area.
Thanks for your input so far - it's appreciated.
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