Partnership questions
Discussion
A friend of mine is maybe going to buy out his buisness partner.They are both 50% share holders in the company.He doesn't have much to do with day to day running of the buisness and this is left to the other partner.Now as he is looking at a fairly large investment in buying out the partner he has asked for a copy of the books on several occasians and been fobbed off each time.
It's all getting a bit messy i think as the partner seems to want it all his own way.My question is, is my friend legally intitled to see the accounts at anytime,(my guess is yes).
Also as a 50% partner is he entitled to a copy of all paperwork relating to the buisness,eg client base list?
It's all getting a bit messy i think as the partner seems to want it all his own way.My question is, is my friend legally intitled to see the accounts at anytime,(my guess is yes).
Also as a 50% partner is he entitled to a copy of all paperwork relating to the buisness,eg client base list?
treehack said:
A friend of mine is maybe going to buy out his buisness partner.They are both 50% share holders in the company.He doesn't have much to do with day to day running of the buisness and this is left to the other partner.Now as he is looking at a fairly large investment in buying out the partner he has asked for a copy of the books on several occasians and been fobbed off each time.
It's all getting a bit messy i think as the partner seems to want it all his own way.My question is, is my friend legally intitled to see the accounts at anytime,(my guess is yes).
Also as a 50% partner is he entitled to a copy of all paperwork relating to the business,eg client base list?
He is absolutely legally entitled to see the books and records of his own company. In fact, as a co-director, he has shared resonsibility for the company and its accounts so he probably should have been paying closer attention to the figures from day 1.It's all getting a bit messy i think as the partner seems to want it all his own way.My question is, is my friend legally intitled to see the accounts at anytime,(my guess is yes).
Also as a 50% partner is he entitled to a copy of all paperwork relating to the business,eg client base list?
I have to ask, has he been signing off the balance sheet and accounts of this company every year?
Did he not understand what he was looking at?
Did he not obtain copies of these accounts for his own records?
Is he afraid that the figures he will have already signed off may not be correct?
Edited by Eric Mc on Monday 2nd March 15:10
[quote=Eric Mc
He is absolutely legally entitled to see the books and records of his own company. In fact, as a co-director, he has shared resonsibility for the company and its accounts so he probably should have been paying closer attention to the figures from day 1.
I have to ask, has he been signing off the balance sheet and accounts of this company every year?
Did he not understand what he was looking at?
Did he not obtain copies of these accounts for his own records?
Is he afraid that the figures he will have already signed off may not be correct?
[/quote]
From what i can tell it is a fairly complicated postion he is in,his partner wants out and my friend has the money to buy the other 50% but only once he has had everything checked out.Now the partner wants it all his way, expecting a payment of £xxx amount then he says he'll hand every thing over and he expects this to be done yesterday!!!
Now my friend is far from stupid and has said to me he would rather fold the company than do this incase there has been some iffy thing going on(and I suspect there are some iregularities(sp))
I have told him to see a solicitor which he has , and also get a copy of the books to get the co. valued by an independant.
I'll relay the advice and see what he says.
Anymore advice welcome though
Thanks
He is absolutely legally entitled to see the books and records of his own company. In fact, as a co-director, he has shared resonsibility for the company and its accounts so he probably should have been paying closer attention to the figures from day 1.
I have to ask, has he been signing off the balance sheet and accounts of this company every year?
Did he not understand what he was looking at?
Did he not obtain copies of these accounts for his own records?
Is he afraid that the figures he will have already signed off may not be correct?
Edited by Eric Mc on Monday 2nd March 15:10
[/quote]
From what i can tell it is a fairly complicated postion he is in,his partner wants out and my friend has the money to buy the other 50% but only once he has had everything checked out.Now the partner wants it all his way, expecting a payment of £xxx amount then he says he'll hand every thing over and he expects this to be done yesterday!!!
Now my friend is far from stupid and has said to me he would rather fold the company than do this incase there has been some iffy thing going on(and I suspect there are some iregularities(sp))
I have told him to see a solicitor which he has , and also get a copy of the books to get the co. valued by an independant.
I'll relay the advice and see what he says.
Anymore advice welcome though
Thanks
Payments to whom?
Suppliers?
Directors?
HM Revenue and Customs?
Directors need to fully understand their legal position. Merely signing off pieces of paper shoved under their noses is a recipe for tears.
If he doesn't have accounts that he can refer to, he should be able to obtain past copies from the accountant. After all, the accountant works for him as much as the other director.
Suppliers?
Directors?
HM Revenue and Customs?
Directors need to fully understand their legal position. Merely signing off pieces of paper shoved under their noses is a recipe for tears.
If he doesn't have accounts that he can refer to, he should be able to obtain past copies from the accountant. After all, the accountant works for him as much as the other director.
Edited by Eric Mc on Monday 2nd March 16:33
there are plenty of threads on here about busines valuations and partnership disputes - these might be relevant if nothing else for a worst case scenario.
your friend's solicitor should be able to draw up a sale agreement that protects your friend. my gut reaction would be that this is the sort of situation where a decent set of warranties/indemnities, net asset value adjustment and a deferred consideration element would be reasonable. of course you'll need the selling shareholder to agree to that though - it depends on the value of the business though, as the more complex an agreement gets, the more expensive it is.
often worth going with your hunch though, and if something doesn't feel right, then it probably isn't.
your friend's solicitor should be able to draw up a sale agreement that protects your friend. my gut reaction would be that this is the sort of situation where a decent set of warranties/indemnities, net asset value adjustment and a deferred consideration element would be reasonable. of course you'll need the selling shareholder to agree to that though - it depends on the value of the business though, as the more complex an agreement gets, the more expensive it is.
often worth going with your hunch though, and if something doesn't feel right, then it probably isn't.
Just spoke to him and he now has a copy of the accounts upto Jan 09 which he will go through tonight, also he got a copy of the client database.
The partner still wants a final payment before he hands everything over,thing is it's him that wants out but on his terms so still high chance of it getting messy
The partner still wants a final payment before he hands everything over,thing is it's him that wants out but on his terms so still high chance of it getting messy
if he wants a bunfight, just threaten a s459 claim for unfair prejudice. they're always good fun, and plenty of lovely billable hours for the lawyers (perfectly reasonable given the mess they are clearing up from people who didn't take proper advice in the first place).
Sorry - got a 459 claim on at the moment and it just reeks of "I told you so".
Sorry - got a 459 claim on at the moment and it just reeks of "I told you so".
Eric Mc said:
These situations often do.
From the sound of things, this chap would be better off gaining complete control of this company so that he can take it in hand properly.
Thats his aim,but won't go through with it if he finds anything wrong,which is proving difficult at the moment as the partner is being abit of a dick about the paperwork side of thingsFrom the sound of things, this chap would be better off gaining complete control of this company so that he can take it in hand properly.
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