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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 31300
Experience:  Over 5 years in practice
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Is it against the law for a major shareholder to pay himself

Customer Question

Is it against the law for a major shareholder to pay himself a dividend into a tax loophole to take money out of a family firm with holding payment to other share holders (EFURB)
Submitted: 4 years ago.
Category: Law
Expert:  JGM replied 4 years ago.
Thank you for your question.

-Could you explain your situation a little more?

Is there a shareholder's agreement,for example?
Customer: replied 4 years ago.

yes there is a share holder's agreement which states 3.2.1.2 make any loan or advance whatsoever(other than normal trading credit or loans or advances of more than £5000.00. At the same time a fellow director is leaving the company on the last Friday in july with a full and final settlement and not know or receive any of this payment.Money paid to efurb was on the 16th July


 


many thanks

Expert:  JGM replied 4 years ago.
Sorry can you explain the situation again.

A shareholder has paid himself a dividend.

A director left in July.

What is money paid to "efurb?"

This is all a bit disjointed. Can you give me the whole story and I will try to help you.
Customer: replied 4 years ago.

The major shareholder paid himself a payment of £182906 into efurb which is a family company pension fund on the 16th of july .a second director knows nothing of this payment because he is leaving the company on the 31/july as a full a final settlement reciving 800k the £182906 was payed as a dividend not including the second share holder also the remaining shareholders had there divvy with held now being payed on the 16th sept

Expert:  JGM replied 4 years ago.
Thank you for that.

Your question appears to come down to did that shareholder have a contractual right to relieve the dividend payment.

So what does the shareholder's agreement or any other document say about declaring and paying dividends?