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Clare
Clare, Family Solicitor
Category: Family Law
Satisfied Customers: 33319
Experience:  I have been a solicitor in High Street Practise since 1985 and have specialised in Family Law for the last 10 years
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Hello,I used to run a company with my ex husband. Between

Customer Question

Hello,
I used to run a company with my ex husband. Between us we had 75% of the co shares (37.5% each). I started divorce proceedings against my ex husband in 2009. He then quickly made moves to remove me as a director of the company and changed all the records at Companies House, completely removing my shareholding. Old Companies House records are now contradicted by the "amended" annual returns which allege I was never a shareholder. I have official copies of both the pre and the post amended documents, all signed by my ex husband and the Financial Statements and Directors' reports from 2006/2007 all showing my correct shareholding. Staff members from the time are very happy to give evidence too. I think this is a a very winnable case but I need a pro bono lawyer. I do not have the financial means now to pay legal fees. I live in Kent, UK. Can you advise? Kind regards, XXXXX XXXXX
Submitted: 3 years ago.
Category: Family Law
Expert:  Clare replied 3 years ago.
Hi
Thank you for your question.
I will do my best to assist you but need some further information first.
What action do you wish to take?
Claire
Customer: replied 3 years ago.

One of the minority shareholders conspired with my ex husband. They concocted a story that I had stolen my shares. I now wish to take the matter through the civil courts to clear my good name and restore my professional integrity as an accountant. I seek damages from the three people who lied to remove my shareholding.The company in question also still owes me in the region of £80,000 in an outstanding directors loan.

Expert:  Clare replied 3 years ago.
Hi
Did you not deal with the financial issue within the divorce proceedings?
Claire
Customer: replied 3 years ago.

No. The judge remarked that he felt this issue should be dealt with in court but it was not part of the divorce hearing. This is an issue of three shareholders conspiring to steal my shareholding and remove me from the list of shareholders. At the time, they were trying to secure a bank loan and knew that I would not sign up to it - so they committed this fraud to remove me.

Customer: replied 3 years ago.

When do I get an answer to my question please?

Expert:  Clare replied 3 years ago.
Hi
Who received the shares?
Claire
Customer: replied 3 years ago.

On formation of the Company, there were 2 issued shares, but 100 authorised shares: One to my ex husband and 1 to another director(Alan) in the company. This was an agreed temporary arrangement in order to get the company formed with a Co formation agent. After the Co was formed and trading, the full 100 shares were allocated: 35 to me, 35 to my ex husband and 30 to the other director. The 2006 co accounts and directors report reflected this shareholding. The 2007 co accounts reported the shareholding change to 37.5 to me, 37.5 to my husband, 15 to a new shareholder and 10 shares to Alan. Alan had left the company by this time (in fact he left in 2006) but retained a small shareholding. The Annual Returns to Companies House all reflected the correct shareholdings. In 2009 I divorced my husband and Alan and he then discussed how to remove me ( as I was blocking a risky bank loan they were trying to secure without my knowledge). The Annual Returns were amended to show only 2 shares again - 1 to my ex husband and 1 to Alan. Alan alleges that I had somehow hoodwinked the company and that Alan had never agreed to losing his 50% share of the company. We had many staff who were all fully aware of the correct shareholdings and had received documents outlining the correct sharehldings. All these peple will give their evidence in court.


 

Expert:  Clare replied 3 years ago.
Hi
So your shares were divided between your husband and "Alan"
Why did you not make this an issue within the financial side of the divorce?
Claire
Customer: replied 3 years ago.

Because the divorce judge said it must be heard in a different civil court

Expert:  Clare replied 3 years ago.
Hi
How much were the shares worth?
Claire
Customer: replied 3 years ago.

Not very much. They had a nominal value of £1 each but they then had full control of the business and I now cannot get management accounts out and as was inevitable, the repayments on my outstanding Directors loan have since dried up. Also the lies told about my "stealing" Alan's 50% shareholding were put in writing to my solicitor and they threatened to "report me" to my Accountancy Institute ( I am a FCMA). This threat was never carried out. They also perjured themselves when I reported their actions and their changing of Companies House records to the police.

Customer: replied 3 years ago.

And they then took out the bank loan they wanted - which I felt was a very bad move. I understand that cashflow has since nose dived and I guess the bank will be looking at a bad debt there. I don't believe anyone, regardless of the value of the shareholding should get away with illegally changing Company official records at Companies House to remove somebody's shareholding. And Alan is now the CEO of a Business Angel Co in the City and boasts how he can effect successful management reconstructions/refinancing deals.

Expert:  Clare replied 3 years ago.
Hi
Whilst I fully appreciate your feelings - could you explain what the financial loss to you amounted to?
Claire
Customer: replied 3 years ago.

MHi Claire,


Yes I can I was the Managing Director of the Company and I was owed substantial funds from a Directors loan. My shares (37.5%) were wiped out and I was forced out as a director. I have had no control or influence over the mgt of the Co since that time and I very much believe it has been mismanaged. My financial loss is the current value of my outstanding loan, circa £80000 plus interest plus the value remaining (if any) in my shares.

Expert:  Clare replied 3 years ago.
Hi
What steps have you taken to recover the Directors Loan?
Claire
Customer: replied 3 years ago.

 


I have applied back to the divorce court to ask a judge to review the case, as my agreed monthly loan repayments stopped last august.


It will be difficult because my husband only had to use "his best endeavours" to see that my monthly loan repayments were made. i am waiting for the response from the court.

Expert:  Clare replied 3 years ago.
Hi
So your ex is repaying the loan to/for you?
Claire
Customer: replied 3 years ago.

No, the company. The divorce judge was clear that he could only order actions to do directly with my ex husband, as oppose to actions to do with the company. My ex husband alone in reality is the company and he makes all the decisions in the company but he maintains otherwise before the divorce court.So, as a director of the company, he was only asked to use his best endeavours to see my loan was repaid. As my ex has made sure I am not a director now or a shareholder, I am not able to see how the company is being run, who is being paid, how the cashflow is progressing, overhead control, purchase policy etc etc etc. I can guarantee that in any further divorce court hearing he will plead that he really had tried hard to ensure my loan repayments were forthcoming but that the company had decided it just didn't have the resources available to do it.

Expert:  Clare replied 3 years ago.
Hi
When is the next court case?
Claire
Customer: replied 3 years ago.

Hi, I don't know. I haven't yet heard back from the court.

Expert:  Clare replied 3 years ago.
Hi
Best guess on the current value of the shares?
Claire
Customer: replied 3 years ago.

Hii Claire,


I have no idea now The latest financial accounts I downloaded from Companies House (up to Dec 2011) show a turnover of £1.3 million and a net profit of circa £89K . But the Fin Dir left at the end of Oct and resigned his directorships. He suggested the Company had severe cashflow problems. But the Co is still active on Co House website and my ex has created other Cos, for example one with an almost identical name plus I believe a Co in China. It's all smoke and mirrors

Expert:  Clare replied 3 years ago.
Hi
Have you considered suing the company for your money?
Claire
Customer: replied 3 years ago.

Maybe but if the company has now spent all its money, which is a distinct possibility, then I achieve nothing other than forcing the company into administration. The divorce judge will hopefully force the company to allow an expert witness to look back over the performance and profits since 2009. I was removed as a shareholder without my consent and against my wishes and removed as a director so I have been unable to influence the management strategy or have any control over the expenses expended since I was forced out. I also lost my monthly salary on which I depended, by their actions. Isn't the theft of my shareholding something I can bring to a civil court? Isn't the damage to my professional reputation ( I am incorrectly accused of theft on record, and as a Fellow of my Accountancy profession, that is not to be taken lightly) something I can bring to a civil court? Isn't the fact that they were motivated in their actions to acquire an unwise bank loan which I was blocking something I can bring to a civil court? Can I not chase the three perpetrators for damages?


Don't forget, there are several people who can be called to testify that Alan knew perfectly well what the correct shareholding of the company was, as obviously my ex husband and the third director also knew. On oath, they have to tell the truth or perjure themselves and I don't believe any of them would want to do that.

Expert:  Clare replied 3 years ago.
Hi
My concern is on what basis you can bring a claim.
I assume that you reported the matter to Companies House
Claire
Customer: replied 3 years ago.

No I haven't. I spoke to Companies House at the time and they said that they relied on the integrity of the director making the annual return to be behaving honestly.


My ex and Alan believel they are on strong ground because there were never any share certificates issued or a transfer of shares done for any of the share transactions - so there is no tangible piece of paper that Companies House will probably ask for, apart from the signed Annual returns. I can hardly drag ex employees to testify in front of companies House who only seem to work by email!

Expert:  Clare replied 3 years ago.
Hi
I am afraid that the only remedy that I can see which might be available is within Company Law.
Whilst I can see that it was clearly a theft of sorts there is no way that the Police will take action.
Realistically I think you best chance of recovering the financial loss is by suing the Company - although you may also be able to force the issue within the family proceedings as well
As I said that leaves Company law which is indeed a specialist area
You can find a brief overview here
http://www.lawteacher.net/company-law/essays/duties-and-responsibilities-of-directors.php
However this is a VERY specialist area and your chances of finding a Pro Bono lawyer willing to deal with this - but you can possibly try using a Direct Access barrister to give you a preliminary view
A starting point could be here
http://www.probonouk.net/
Claire

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