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Ash, Solicitor
Category: Law
Satisfied Customers: 10914
Experience:  Solicitor with 5+ years experience
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I own a business 50:50 with my business partner, we are both

Resolved Question:

I own a business 50:50 with my business partner, we are both the only shareholders and only directors (I am Managing Director, he is Technical Director). He has breached his director's duties by stealing money from the business - alongside a number of other issues he has caused the business. I do not want to spend thousands of pounds on a barrister (we're a small business) but would be happy to defend myself. Would this be feasible and how would I proceed?
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Hello my name is XXXXX XXXXX 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. There is no need to wait here, you will get an email when I reply.

When you say defend yourself, have proceedings been issued? Do you have any form of written agreement between you please?

Customer: replied 2 years ago.

No proceedings have been issued. I have visited a solicitor to be advised on what the case would be and they've advised it's breach of duty. Basically my partner over the last year has :

* Diverted around £28k of income to his own business without authorisation. I have asked for the return of this on a number of occasions

* Refusing to attend board meetings

* Refusing to enable the business to join a new consortium which will save us around £20k per year (although he's already agreed to this and signed the contract, he will not go to the final meeting that's needed for us to be accepted)

* Made sporadic payments to himself from our account, totally unwarranted and unauthorised

* Has harrassed staff

* Has brought the business into disrepute with suppliers and wrongly informed them we are insolvent (we're not!), to try and damage a project.


Basically the man is mentally unhinged but I want to prevent him from damaging the business further.


The lawyer I saw wanted to proceed straight to barristers and court, but also admitted it would be a very costly procedure. I am more than happy to represent myself / the business in court and I have been advised there is more than enough to prove the case..... but it's a matter of what steps I take from here.

Customer: replied 2 years ago.
Relist: Other.
Alex specialises in Landlord, Tenant and Social Law whereas my question is more in the realms of commercial litigation and shareholder disputes. Alex was assigned after the question was asked but I suspect it's not his / her key area of expertise hence the delay in answering?
Expert:  Ash replied 2 years ago.
You have to bear in mind that I am travelling back from Court. As a local authority lawyer I also deal with commercial matter.

Do you have any Director/Shareholder agreement as I asked above please?

Customer: replied 2 years ago.

Sorry Alex, I wasn't sure whether this was your speciality.


There is no agreement outside the standard articles that are issued when you start a company, which we did in 2008.

Expert:  Ash replied 2 years ago.
Are these drawings as a directors loan?

Customer: replied 2 years ago.

No. There are a number of issues.

1. There is a source of income (commission based where we effectively work as an agent) that this director has diverted solely into a totally separate business owned by himself. This is despite this income being generated under our brand and from our website. This is in the region of £30k per annum and he started to divert this earlier this year. I have repeatedly asked for the return of this.

2. He has made unauthorised payments to himself from the bank account without any justification. This is not in repayment of a DLA nor is it dividends

3. Despite having signed a contract for a new business relationship which will save the business around £20k per year, he now refuses to attend a meeting which is needed to start this new relationship.

4. He has emailed a key supplier, harrassing them and then telling them the business is insolvent and they shouldn't be dealing with us to deliberately railroad a project. This is a complete lie, we are solvent and have no outstanding debts.

5. He has deliberately tried to put a stop to key projects that will move the business forward.

6. He refuses to attend director's meetings and has not been in the office since Spring.

7. He has harrassed staff with warning letters (totally unjustified) and threats.


These are just a few of the issues, but in essence it's the two issues that are costing the business a large amount of money that are key (points 1, 2 and 3). His behaviour is damaging the business financially as well as bringing it into disrepute with suppliers.

Expert:  Ash replied 2 years ago.
How much has the Company lost in total please?

Customer: replied 2 years ago.

I am not exactly sure how much we have lost due to him diverting funds from the commission - he has ensured I have been blocked from all information apertaining to this. Going from previous years however it would be around £2-2.5k per month so an estimate of £20-£22k would be conservative in our last financial year (which ended 30th November)


Because of his refusal to attend the meeting to start the new business relationship, we have lost in the region of £20k in our financial year.


He has taken in the region of £5k from the bank account either as a direct payment to his own bank account, or payments to suppliers for items apertaining to another business, which he has paid from our account (and for which he is refusing to provide invoices).


These losses will be experienced each year if this isn't stopped / reversed.


I should add at this point that it is highly likely this director is using the business as a form of emotional control over me rather than being particularly interested in the business - the result of a long expired but bitter personal relationship. My interest is not in the emotional side of it, I simply want to keep the business on track and performing to the best of its abilities, hence the need to start action for breach of fiduciary / director's duties.

Expert:  Ash replied 2 years ago.
How much are we talking to do you think? So I have an idea of value.
Customer: replied 2 years ago.

In the last financial year, c.£45k

Expert:  Ash replied 2 years ago.
You would need to apply to the Court to have him removed for breach of fiduciary duty.

You would need to notify him and allow him to step down. If he refuses then you need to issue proceedings and complete form N1 and the Court will issue the claim and send him a copy which he can defend.

If he defends it then the matter will be set down for a hearing and you can ask the Court for an Order that he be removed as a Director. He will always remain a shareholder until he is bought out - but he can be removed as a Director.

Can I clarify anything for you about this today please?


Customer: replied 2 years ago.

Thanks Alex. Would you recommend trying mediation ('Alternative Dispute Resolution') first, or going straight to court?

Expert:  Ash replied 2 years ago.
You could get a letter from a Solicitor first. If that does not do any good and you issue proceedings the Court will offer mediation as part of the service.


Ash, Solicitor
Category: Law
Satisfied Customers: 10914
Experience: Solicitor with 5+ years experience
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