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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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I am the Director of two uk Companies, One i have a 25% share

Customer Question

I am the Director of two uk Companies, One i have a 25% share and the other I have 49% share.
Basically I have found the other director has been making decisions behind my back some boarding on illegal. I voiced my concerns and only found out today that she is trying to remove me as a Director and Shareholder. (Only herd this third hand) but obviously very concerned. Can she do this?
Also she has now cut me off from the business (Ask me not to communicate with the business)and making very bad decisions what powers do I have?
Thanks
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

AlexWatts2013 : Hello my name is Alex and I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return.
AlexWatts2013 : Do you have any written agreement please?
Customer :

Hi,

Customer :

other than been a registered director for each no

AlexWatts2013 : Have there been Board meetings and resolutions please?
Customer :

There has been some board meetings but no resolutions made. And none since jan thats one company the other company only got formed in july

AlexWatts2013 : You can not be removed as a shareholder as this is impossible unless you sell your share. Decisions should have been made via board resolutions, if not then technically they are invalid. Further if she is trying to remove you then you could apply for a resolution via EGM that she be removed as a Director.
AlexWatts2013 : Then if passed they would be removed. In any event you could seek protection under the Companies Act 2006 which protects shareholders. That means if decisions are being made without authority you would be able to seek an injunction to stop them and maybe even seek protection. But you do have rights and can never be removed as a shareholder unless you sell your share.
AlexWatts2013 : Can I clarify anything?
Customer :

Thanks i understood the share holder bit.

Customer :

My main concern is that she is making very bad decisions and she has asked me to not communicate with the buisness.

Customer :

Im really concerned as a director and I think its more than when than if they are going to come look at me.

Customer :

Can I still ask her to be removed even if she and I are the only directors?

Customer :

and she has 75 shares and i only have 25

Customer :

also how do i go about protecting myself that i am aware of someone already considering to sue the company. And how if she has blocked me from dealing with the buisness i need to protect myself as this is all going to blow up very soon. Thanks

Customer :

she has also told the business I have been fired (i have never drawn a salary or any payment of any kind) and not to deal with me in any way

Customer :

where i say come look at me i mean as a director.

AlexWatts2013 :

I see, if she has 75% you would struggle. If she is breaching her duties as a Director the Court may order that she is removed, that is entirely possible.

AlexWatts2013 :

If someone wants to sue the Company you will not be named unless you have a personal guarantee. As Director and shareholder you have a right to see Board resolutions and minutes of meetings. She can only take action if she has been given the authority or resolutions have been passed.

AlexWatts2013 :

This sounds like an internal dispute and they are often hard to deal with especially when someone has a reasonable majority. She can not force you out as a shareholder that can not happen - but she can as a Director as she has majority.

AlexWatts2013 :

But the business must continue to be run properly, if not you could seek an injunction to have her removed.

AlexWatts2013 :

If this fully answers your question, please take a moment before you leave and rate my service, it only takes a second and is an important part of the process. Otherwise if you need more information or help then please click reply. Alex

Customer :

Hi,

Customer :

just so im clear so if i think her actions are putting the company in a serious legal position who do i approach and how do i put on notice that although i am a director i have no control over her actions? and will not accept liability?

Customer :

as to forcing me off as a director that has to be done at a meeting which i presume i have to have notice off and also as she is in Monaco does it have to be held in the UK or can she be awkward and call it in Monaco?

Customer :

Is it better for me to just call one myself and make sure my concerns are noted in an egm and again can i call that in the UK.

Customer :

Thanks for all your help

Customer :

also could they devalue the company or simply shut it down or run it into the ground to make my shares worthless?

AlexWatts2013 :

Yes I would put your concerns in writing that states you do not accept liability for her actions and whatever flows from that. If she removed you then there would need to be a resolution and you would have notified as such. She could call it in Monaco but it would not be binding unless your Articles of Association state outside jurisdiction meetings county.

AlexWatts2013 :

Its a matter for you whether you deal with this at an EGM or otherwise but there is the risk she could run it into the ground.

AlexWatts2013 :

Please remember to take a moment to rate my service today, thank you. Alex

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