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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11417
Experience:  30 years as a practising solicitor.
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I have opened a LTD company in February 2013 in may name only.

Resolved Question:

I have opened a LTD company in February 2013 in may name only. initially it was verbally agreed that i would share the company with my sister and an independent investor . it was agreed that I will own 50% of the company, my sister will own 30% and the remaining 20% we decided to give to the investor. shortly we decided not to involve any third party into the company and decided not to look for an investor. this is when the difficulties started between my sister and I - she asked for 50% share of the company which i could not agree to as i invested much more money and time into this business. my sister transferred £9000 into the company's bank account. She also claims she invested in the company additional £7000 in credit cards. on top of the above she also evaluated the work she inputted in the company for about £3000. there is no written agreement between my sister and I regarding either the company share, her employment or money she invested. due to unresolved disagreement between us and the fact that she has found out she is unable to take any employment within 3 miles within a competitor company of her previous employer, my sister decided that she no longer wishes to be involved in the company, does not wish to have any share of the company and ultimately asked me to return £ 19,000 to her immediately in cash. As it is a new business it does not bring any income at the moment, hence i am unable to return this money to her at this moment even if i really wanted to. Since my sister made her immediate request of money, she has been harassing me, my partner and other mutual friends putting a bad name on me and my business. she has threatened me to take the case to court . Could you please advise me what my legal rights in this situation are ? does she has any legal grounds to take the case to court? what should be the best course of action for me to take? your support and assistance is highly appreciated.
Submitted: 3 years ago.
Category: Law
Expert:  JGM replied 3 years ago.
Thank you for your question.

Have any shares been issued yet? Have directors been appointed?
Customer: replied 3 years ago.

I am the only appointed director and the only shareholder of the company

Expert:  JGM replied 3 years ago.
In that case the company owes her the money she has put in and can sue the company in court. You can either pay her or run the risk of the company being sued and possibly put into insolvency.

There is no shareholders agreement and no shares issued to her. That should have been done at the start.
Customer: replied 3 years ago.

Thank you for your answer.


does this change anything that my sister did not wish to have any shareholders agreement and had any written conformation of shares which could be issued to her due to her terms of contract with her previous employer. Is there any possibility that i could go to court to obtain court order for a payment settlement as i would like to pay her the money back but in installments ?

Expert:  JGM replied 3 years ago.
No she is still entitled to her money back. However she has to be realistic. See if you can make an offer to pay her back in instalments and possibly with something in addition for the use of her money.

You presumably don't want the company to fold so quickly over this.
Customer: replied 3 years ago.

Thank you very much for your answer.


 


this is what i have been trying to offer my sister, however she seems not to be willing to accept any agreement. could you please advise if a written - (mail to my sister) conformation of my offer of paying her the money back to my sister in installments would be sufficient evidence at court to support my case - should she decide to take the case to court? Also i am disputing her valuation of her work - is this something i could possibly argue at court as well? should the case go to court do you believe i would have any chances to obtain a court order which would order the company to pay her money back in installments?

Expert:  JGM replied 3 years ago.
Unfortunately the court does not have the power to order payments by instalments where the defending party is a limited company. You would have to reach an agreement. The valuation of the work is of course arguable as long as the cost of arguing doesn't exceed the cost of the monies claimed to start with. That is a matter for you to assess on a commercial basis.

Given the cost of proceedings in court you really want to reach a compromise and avoid litigation.
Customer: replied 3 years ago.

please accept my apologizes for asking so many questions, however this matter is very important to me hence i would like to obtain as many detailed information as possible.


 


I have no intentions not to return the money back to her, and ideally i would love to reach an agreement with her. however, if this would not be possible due to her response and she decided to take the case to court , would I / the company have to cover the costs of the court proceedings?

Expert:  JGM replied 3 years ago.
The general rule is that the party who wins a court action is entitled to costs from the other party.

The only defence the company may have is that she agreed to participate and then didn't. I wonder if the restrictive covenant which prevented her from working from the company might be able to be used to the company's advantage. She must or ought to have known that that was going to be a problem from the start.
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