Directors falling out, one has been pushed out - what we do?
Discussion
A friend and her friend started an 'events' Ltd company - both 50/50 share holders.
Now, 6 months down the road they've had a major falling out and my friend has litterally been pushed out of the business (office was at the other girls house).
Can anything be done? They had accumulated about £20K in the business account of which they are both signatories for the cheque book. My friend has been told she'll get nothing.
D'oh!
Now, 6 months down the road they've had a major falling out and my friend has litterally been pushed out of the business (office was at the other girls house).
Can anything be done? They had accumulated about £20K in the business account of which they are both signatories for the cheque book. My friend has been told she'll get nothing.
D'oh!
What is the situation on her Director's Loan Account? - Didn't have one. They started the company from scratch in May this year
Does the company owe her money? - They agreed to split profits 50/50
Is the company planning on paying any dividends in the near future? - she hasn't spoken to her partner
Is your friend still a shareholder? - Yes, 50%
Does the company owe her money? - They agreed to split profits 50/50
Is the company planning on paying any dividends in the near future? - she hasn't spoken to her partner
Is your friend still a shareholder? - Yes, 50%
If the company has made profits - then the normal way of distributing these profits would be by way of a dividend. As your friend is a 50% shareholder, she would be entitled to 50% of any dividends.
The directors loan account might show her as being owed some money - on the assumption that she put some cash into the business to start with - or personally provided some of the assets or working capital of the company at its start-up stage.
Ascertaining what the actual position is will require accounts to be drawn up. As the company has only been running a few months accounts may not have been prepared yet so working out her correct current position may not be straightforward just yet. If matters have come to an irretrievable situation, she may need to get an accountant (either the existing appointed accountan or one of her own chosing) to look into the situation for her.
The directors loan account might show her as being owed some money - on the assumption that she put some cash into the business to start with - or personally provided some of the assets or working capital of the company at its start-up stage.
Ascertaining what the actual position is will require accounts to be drawn up. As the company has only been running a few months accounts may not have been prepared yet so working out her correct current position may not be straightforward just yet. If matters have come to an irretrievable situation, she may need to get an accountant (either the existing appointed accountan or one of her own chosing) to look into the situation for her.
At 50% ownership she is not a majority shareholder so cannot "force" anything legally. However, having such a large shareholding does mean that she can force her views from an "influential" or economic point of view.
If she wants to withdraw from the company, she should set out the terms under which she wants to withdraw (if not already set out under a directors' agreement).
If she wants to withdraw from the company, she should set out the terms under which she wants to withdraw (if not already set out under a directors' agreement).
ACEparts_com said:
What is the situation on her Director's Loan Account? - Didn't have one. They started the company from scratch in May this year
The Director's Loan Account is not an actual account or an actual loan, it is an accounting term for the amount of personal money a Director has put into the company or taken out (and over and above any dividends or salary etc.)Eric will be able to give far more details and possibly correct any glaring mistakes have made in the above too.
Edited by JonRB on Monday 17th September 08:26
The Director's Loan Account shows the level of monies either owed to the company by the director or owed to the director by the company - preferably the latter.
The balance is usually made up of a number of factors -
cash injected into the business by the director (but not cash used to buy shares in the company)
assets or expenses bought for the use of the company but paid for personally by the director
assets actually "gifted" to the company by the director. This is not that unusual in small companies as directors "introduce" what had been personal assets (such as computers, cars etc) into the business at commencement
monies owed to the director in respect of expense claims
monies owed to the director in respect of unpaid dividends or unpaid salaries
The balance is usually made up of a number of factors -
cash injected into the business by the director (but not cash used to buy shares in the company)
assets or expenses bought for the use of the company but paid for personally by the director
assets actually "gifted" to the company by the director. This is not that unusual in small companies as directors "introduce" what had been personal assets (such as computers, cars etc) into the business at commencement
monies owed to the director in respect of expense claims
monies owed to the director in respect of unpaid dividends or unpaid salaries
Thanks for the clarification. Apparently they both GIFTED the proceeds of a job which they had started before the formation of the company (£15K)
I get the feeling her partner will require some persuading to hand over half of this money. Can my frined just bail in with a small claim / winding up petition?
I get the feeling her partner will require some persuading to hand over half of this money. Can my frined just bail in with a small claim / winding up petition?
Eric Mc said:
Can they not come to some arrangement rather than get all nasty?
Is the company solvent and can it afford to repay to your friend the money she invested?
Just spoken to her again; apparently her partner emailed her saying she will not be receiving any money and to contact her through her solicitor. So I guess the answer to that question is NO.Is the company solvent and can it afford to repay to your friend the money she invested?
ACEparts_com said:
Just spoken to her again; apparently her partner emailed her saying she will not be receiving any money and to contact her through her solicitor. So I guess the answer to that question is NO.
The partner is a fool then if she thinks she can just tell a 50% shareholder and co-director to whistle.If it's going to get legal then I say issue a winding-up order on the company.
Looks like it might be the only option then.
Have any accounts been drawn up yet?
Can the financial situation of the company be ascertained through the normal book-keeping records?
Was the responsibility for book-keeping and recording shared between the two directors?
Which director has easisest access to these records?
With which director does the company accountant have the closest contact?
These are all relevant points if your froiend needs to quantify how much she is owed.
Have any accounts been drawn up yet?
Can the financial situation of the company be ascertained through the normal book-keeping records?
Was the responsibility for book-keeping and recording shared between the two directors?
Which director has easisest access to these records?
With which director does the company accountant have the closest contact?
These are all relevant points if your froiend needs to quantify how much she is owed.
Gassing Station | Business | Top of Page | What's New | My Stuff