Advice needed please :-(
Discussion
I own a 50% share in a company of which I am a director, the other party is not.
Now, recently, I have found evidence to prove that the other party is
ing me over (not with the company but in other things) which seems quite dark and not what I expected and I have lost trust in the other party.
Now, where do I stand in terms of ownership of the company? There is no solicitor's contract which outlines our share, I think something was outlined to companies house when the company was set-up, but is that enough?
Basically, what I need to know is if you lost trust in your business partner, what would you do? Confront them? Or play it quiet but make sure you are fully covered?
Any advice greatly welcomed!
Now, recently, I have found evidence to prove that the other party is
ing me over (not with the company but in other things) which seems quite dark and not what I expected and I have lost trust in the other party. Now, where do I stand in terms of ownership of the company? There is no solicitor's contract which outlines our share, I think something was outlined to companies house when the company was set-up, but is that enough?
Basically, what I need to know is if you lost trust in your business partner, what would you do? Confront them? Or play it quiet but make sure you are fully covered?
Any advice greatly welcomed!
I have seen a similar case whereby partner A was the 'worker' with the expertise in the industry and partner B was the 'money man' who did the marketing, financials and the financial reporting.
After four or five years of decent business partner A comes to look through the books to find that there were a lot of funding for assets which he could not see in the business - they were at the other partners house! Similarly, the cost of the building work at the company was pretty expensive - and just co-incidentally partner B's house also got a nice extension from the same company!
My advice was if that is the only things he has found out about there is likely to be much more. The simple fact is if you cannot trust your partner not to screw you over, you need a new one.
If the 'shadyness' of your parter is outside of work, and does not affect his work and you are onto a nice little earner, keep it at that, keep him at arms length and get everything checked. If it is inside of work you could be better off buying in or selling out...
After four or five years of decent business partner A comes to look through the books to find that there were a lot of funding for assets which he could not see in the business - they were at the other partners house! Similarly, the cost of the building work at the company was pretty expensive - and just co-incidentally partner B's house also got a nice extension from the same company!
My advice was if that is the only things he has found out about there is likely to be much more. The simple fact is if you cannot trust your partner not to screw you over, you need a new one.
If the 'shadyness' of your parter is outside of work, and does not affect his work and you are onto a nice little earner, keep it at that, keep him at arms length and get everything checked. If it is inside of work you could be better off buying in or selling out...
Thank you, letting it go and keeping it at arms length is pretty much the way I am swaying.
But if I confront the other party, I'd need to demand that we get some kind of contract sorted in terms of ownership.
Is their a special term for this? Can we just go to a solictor and get it sorted?
But if I confront the other party, I'd need to demand that we get some kind of contract sorted in terms of ownership.
Is their a special term for this? Can we just go to a solictor and get it sorted?
srebbe64 said:
This has the potential to be VERY messy. If I were in your shoes I'd have an honest and unemotional chat with him. I would strongly counsel you to not fall out with your partner in an acrimonious way. If you do - no good will come of it (IMHO).
Well, I wouldn't fall out, but I'm feeling like I'm being used for my expertise to get the company where it needs to be - and now that I have lost all trust, I'm worried that I could be swindled out of my own company.
So if I confronted them, and layed out some ground rules (i.e. demanding we have a legel contract in place in terms of ownership) what I want to know is - is this possible, do such contract exist.
I need some kind of protection.
Your initial post was devoid of specific information - so it's not too easy to take a view. What you probably need is a 'shareholders agreement'. Tell your partner that you'd like this and then appoint a lawyer. However, make sure you use a lawyer who will pose lots of searching questions/scenarios.
srebbe64 said:
Your initial post was devoid of specific information - so it's not too easy to take a view. What you probably need is a 'shareholders agreement'. Tell your partner that you'd like this and then appoint a lawyer. However, make sure you use a lawyer who will pose lots of searching questions/scenarios.
Thank you, sound advice as always!
Agree with Screbbe, if the other party is a sharholder and not an employee then get a shareholdrs agreement drawn up (you will each need your own solicitors to review it before signing).
If he is an employee (but not a director) then you have some other options, as you could as a director fire him (but he could then claim unfair dismissal and you could claim all the things he's been doing wrong and a huge bun fight would be incurred, a bit extreme but you'd get a result (and some satisfaction))
If he was a director then you'd normally need board approval to fire him
Alternatively you could offer to buy his shares off him at a fair value (or in fact any value)
Or if its a fairly new startup (or small company) and you control the clients (or enough of them), you could just quit and start again on your own. If the company only consists of yourself and this other party then this is not as daft as it sounds (unless you think your shares are worth loads of money), it's simple and gives you a clean sheet to start from.
davidy (someone who has been involved in the removal of a co-director and someone who has quit one of the companies he owned a stake in!)
If he is an employee (but not a director) then you have some other options, as you could as a director fire him (but he could then claim unfair dismissal and you could claim all the things he's been doing wrong and a huge bun fight would be incurred, a bit extreme but you'd get a result (and some satisfaction))
If he was a director then you'd normally need board approval to fire him
Alternatively you could offer to buy his shares off him at a fair value (or in fact any value)
Or if its a fairly new startup (or small company) and you control the clients (or enough of them), you could just quit and start again on your own. If the company only consists of yourself and this other party then this is not as daft as it sounds (unless you think your shares are worth loads of money), it's simple and gives you a clean sheet to start from.
davidy (someone who has been involved in the removal of a co-director and someone who has quit one of the companies he owned a stake in!)
I know the information I have supplied is rubbish, but I believe the other party actually reads these forums, but at the same time I know these forums to be the best source of advice pre-lawyer.
I will try and give you more info:
The company owns a website that has become very popular, through our hardwork, but my guidance and my expertise.
It has the potential to earn huge money.
I'm not perpared to walk away - (anyone who works in SEO will understand why)
The other party is trying to do the same thing in the same industry on their own, using my techniques that I have taught them. Which is fair enough, BUT the fact they haven't mentioned this sets alarm bells ringing in my head - the fact that we discussed this competitor (who actually is my partner) face to face and they never came clean at that point sets alarm bells ringing.
On the other hand, the other party has the skills that I don't, e.g, building a business, finanances, accounts, drive, enthusiasm, etc.
It's a case of trust, I could still work with them, for the good of the business, but I'd never ever trust them again.
I will try and give you more info:
The company owns a website that has become very popular, through our hardwork, but my guidance and my expertise.
It has the potential to earn huge money.
I'm not perpared to walk away - (anyone who works in SEO will understand why)
The other party is trying to do the same thing in the same industry on their own, using my techniques that I have taught them. Which is fair enough, BUT the fact they haven't mentioned this sets alarm bells ringing in my head - the fact that we discussed this competitor (who actually is my partner) face to face and they never came clean at that point sets alarm bells ringing.
On the other hand, the other party has the skills that I don't, e.g, building a business, finanances, accounts, drive, enthusiasm, etc.
It's a case of trust, I could still work with them, for the good of the business, but I'd never ever trust them again.
sulkysoutherner said:
Eric Mc said:
Why not buy him out?
Well, the business needs him, in terms of skills and drive.
He wouldn't sell, and I can't force him can I?
Or he could do the same to me?!
At least you have found out or suspect he is trying to shaft you! but would you have or the company have Intellectual property rights, over what you are developing and hence he could not copy this and start his own business.
I am investigating options as i beleive what i am looking at developing could be a money spinner and am looking into non-disclosure agreements and contracts but all seems to be a minefield.
Good luck, and i would possible seek legal advice of how to stop him copying what you are doing and forming a competing company!
This is very dishonest of him and I'd be very concerned. You should really have a shareholders agreement that covers related activities as if his other venture steals all of your business you'll just own 50% of a shell.
I sugest that you do not tell him what you know but suggest to him that to protect each other you both agree to share ownership of all involvements of this nature each has. So, basically, a partnership agreement that might cover several businesses. This should protect both of you and allow each to be compensated should one decide to go his own way. From what you've said he will be very nervous about this and will either just agree (in which case if the agreement is worded correctly you'll have an interest in his venture) or eventually have to come clean.
In the end though once you get to this point it's never quite the same again - shame.
I sugest that you do not tell him what you know but suggest to him that to protect each other you both agree to share ownership of all involvements of this nature each has. So, basically, a partnership agreement that might cover several businesses. This should protect both of you and allow each to be compensated should one decide to go his own way. From what you've said he will be very nervous about this and will either just agree (in which case if the agreement is worded correctly you'll have an interest in his venture) or eventually have to come clean.
In the end though once you get to this point it's never quite the same again - shame.
AlexHancock said:
This is very dishonest of him and I'd be very concerned. You should really have a shareholders agreement that covers related activities as if his other venture steals all of your business you'll just own 50% of a shell.
I sugest that you do not tell him what you know but suggest to him that to protect each other you both agree to share ownership of all involvements of this nature each has. So, basically, a partnership agreement that might cover several businesses. This should protect both of you and allow each to be compensated should one decide to go his own way. From what you've said he will be very nervous about this and will either just agree (in which case if the agreement is worded correctly you'll have an interest in his venture) or eventually have to come clean.
In the end though once you get to this point it's never quite the same again - shame.
I sugest that you do not tell him what you know but suggest to him that to protect each other you both agree to share ownership of all involvements of this nature each has. So, basically, a partnership agreement that might cover several businesses. This should protect both of you and allow each to be compensated should one decide to go his own way. From what you've said he will be very nervous about this and will either just agree (in which case if the agreement is worded correctly you'll have an interest in his venture) or eventually have to come clean.
In the end though once you get to this point it's never quite the same again - shame.
Thank you - it's all noted - and yes, it is a great shame.
Although due to the nature of the income of the business, it would be difficult to steal business.
As for our company, he can't force me out can he? I presume the share status is recorded at companies house?
The company is making some big commitments over the coming days, so I shall ask that before we do this is there anything he needs to tell me, then force an acceptance of a shareholder's agreement.
sulkysoutherner said:
Eric Mc said:
If you are equal shareholders, neither one of you has a voting majority so any attempts to out vote each other would be pointless.
Well, I didn't mean voting me out, but using some kind of underhand techniques or changing paperwork at companies house etc.
who is down as secratary?
Eric Mc said:
Changing paperwork at Companies House without you being aware of the changes would be construed as fraud so you would or could have legal redress.
It would but this would involve extra hassle and stress.
Seem like the plan forming for you is to get a indipendent Company secratary, shareholder agreement and a partnership agreement in place..
stevieb said:
Eric Mc said:
Changing paperwork at Companies House without you being aware of the changes would be construed as fraud so you would or could have legal redress.
It would but this would involve extra hassle and stress.
Seem like the plan forming for you is to get a indipendent Company secratary, shareholder agreement and a partnership agreement in place..
Is there some kind of mediation service that can offer a company secretary?
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