Directors removed from companies house without their consent

[PoorCarCollector]

Hi all,

Bit of an odd one this, a business I'm a director of (with 3 of us as directors/shareholders) has had 1 director remove both of us other directors from companies house records. The same day, he's added his wife as a director. I only know this as thankfully I've got an alert set up on companies house (I highly recommend doing this if you are part of a business!). We've got a detailed shareholders agreement that requires the usual meeting/voting to remove a director, which obviously hasn't been followed.

It looks like its a common issue, eg:-

https://www.ukbusinessforums.co.uk/threads/false-c...

Where do we start to rectify this?? We believe it's being done as his other business, which we are not a part of, is insolvent and he's planning on adding his wife to our Barclays business account and then withdrawing our funds (we have a dual signatory account). I have found out today Barclays will only remove / add a mandate when companies house shows the director either being added or taken off. I've tried to speak to Barclays, but they aren't willing to help, I assume as nothing has yet happened and it'll be our word against his and only he and his wife are now listed as directors!

I've notified our accountant, who's always slow to respond, is this a police matter or solicitor 1st?

Help appreciated

[Stick Legs]

If you can evidence this it is surely fraud if any withdrawal takes place!

Thanks for posting.

[Westy65]

You could start by call the Companies House helpline who I have found useful for guidance on other topics.

[essayer]

Think you’ll need legal advice and a petition to the High Court

https://www.shma.co.uk/our-thoughts/a-practical-gu...

https://www.justice.gov.uk/courts/procedure-rules/...

Edited by essayer on Wednesday 26th February 22:07

[TownIdiot]

What's the shareholding of the business?

Edited to clarify - is it equal or does the other party have a majority? If the other party has a majority does the shareholders agreement allow them to make decisions?

Further edit to say :- I'd be down to your nearest Barclays with some ID and demanding that they freeze the account and putting them on notice
Then round the director to let him know you are aware of what he's done.

Edited by TownIdiot on Wednesday 26th February 22:51

[StevieBee]

PoorCarCollector said:

Where do we start to rectify this?? We believe it's being done as his other business, which we are not a part of, is insolvent and he's planning on adding his wife to our Barclays business account and then withdrawing our funds (we have a dual signatory account). I have found out today Barclays will only remove / add a mandate when companies house shows the director either being added or taken off. I've tried to speak to Barclays, but they aren't willing to help, I assume as nothing has yet happened and it'll be our word against his and only he and his wife are now listed as directors!

I've notified our accountant, who's always slow to respond, is this a police matter or solicitor 1st?

Help appreciated

This is a vagary of Companies House that I've yet to understand.

If you so wished, you could fill out form TM01 and remove both him and his wife as Directors without their knowledge in the same way they have done to you.

My guess is that Companies House assumes that due process is followed at all times.

That process requires a shareholder vote to approve the termination and this be properly recorded and the Director concerned, duly notified. Or that the Director has voluntarily resigned the position.

If that hasn't happened then removal can be considered either improper or unlawful or anything in between depending on the circumstance.

In your case, your assessment of the reasoning is only you second-guessing (in the eyes of the law) so the police will have no interest at all. But you do need to engage a solicitor who specialises in company law to seek advice on the actions available to you.

Keep in mind that 'Director' is simply a term that legally confirms the allocation of legal responsibility in regards to the management and compliance of the business. It doesn't affect shareholding.

[Googie]

Wasn’t aware of any of this and thanks to all who have posted. Whilst clearly unacceptable 2 fraud related threads in quick succession maybe a sign of the times with some maybe living beyond their means and looking for a lifeboat.

[NorthDave]

Assuming the share holding allows it I would join with the other director to form a majority and remove both of them as directors. Then I would contact Barclays and remove him from the account.

After that I would confront him and work out how to go forward.

[Sheepshanks]

When our company was acquired I was quite surprised that my name disappeared as a Director on the Companies House website - I knew it was going to happen but no-one explicity told me, or asked me to resign, sign anything etc.

I was still working for the company, and did for another 6mths, then retired.

[Mr Overheads]

NorthDave said:

Assuming the share holding allows it I would join with the other director to form a majority and remove both of them as directors. Then I would contact Barclays and remove him from the account.

After that I would confront him and work out how to go forward.

Presuming you each own 1/3rd shareholding and Articles allow a majority vote to appoint Directors. The 2 shareholders can vote to remove the Director and appoint the other 2 Directors. Once done and then forms done at Companies HOuse call Barclays show ou ar ethe new Directors and that the old Director should not be given any access.

Also open a say Starling Bank online in minutes and transfer funds to it while you still have Barclays access.

[TownIdiot]

Sheepshanks said:

When our company was acquired I was quite surprised that my name disappeared as a Director on the Companies House website - I knew it was going to happen but no-one explicity told me, or asked me to resign, sign anything etc.

I was still working for the company, and did for another 6mths, then retired.

When this happened to me it was agreed as part of the SPA but it was picked up by the trade press who ran a story saying my directorship had been "terminated"
Not a great look.

[AB]

While this thread is open, and sorry to hijack. What's the situation with getting rid of a shareholder? If someone has been terminated as a Director with a majority vote by shareholders (5 to 1) but still owns 5% shares vs 95% of the other 5, is it a case of paying him off at value of shares as they stand?

Who values them? Sorry to hijack, this situation arose recently in a company which had traded very little.

[TownIdiot]

AB said:

While this thread is open, and sorry to hijack. What's the situation with getting rid of a shareholder? If someone has been terminated as a Director with a majority vote by shareholders (5 to 1) but still owns 5% shares vs 95% of the other 5, is it a case of paying him off at value of shares as they stand?

Who values them? Sorry to hijack, this situation arose recently in a company which had traded very little.

If there is no shareholder agreement then it can get a bit complicated.

Minority shareholders do have protections but tbh they can also be quite difficult to enforce.

[CoolHands]

Can’t you add your wife and get in before him then

[StevieBee]

AB said:

While this thread is open, and sorry to hijack. What's the situation with getting rid of a shareholder? If someone has been terminated as a Director with a majority vote by shareholders (5 to 1) but still owns 5% shares vs 95% of the other 5, is it a case of paying him off at value of shares as they stand?

Who values them? Sorry to hijack, this situation arose recently in a company which had traded very little.

The shareholder agreement / articles of association will set out the process. But in keeping with the tradition on these pages on such matters, let's assume there isn't one.

And let's assume the Shareholder in question doesn't want to go.

One option is that the company issues a Call Up Share Capital Notice to shareholders that requires them to pay the company additional capital. This can be for any stated reason - growth investment, capital investment, etc. This is set at an amount that's unaffordable to the errant shareholder. Others pay but troublesome one can't so their shareholding diminishes. Do this a couple of times and their shareholding becomes essentially worthless to the point where you can then force them to relinquish their shares. This of course assumes the other shareholders have the cash to play ball but I know at least one case where the owner lent the others the money to help remove two shareholders. And would be difficult if the shareholder did in fact have the money.

Another option is try simply place the company into voluntary liquidation and start again. But this costs money, is disruptive and may impact reputation.

The best option is to simply pay the person off.

[Simpo Two]

StevieBee said:

If you so wished, you could fill out form TM01 and remove both him and his wife as Directors without their knowledge in the same way they have done to you.

I quite like that! - and there is justification to do so.