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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3671
Experience:  Solicitors 2 years plus PQE
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I am looking for an advice in company law subject. I am a shareowner

Customer Question

I am looking for an advice in company law subject. I am a shareowner of a company, but i was not given any documentations to sign when i joint the company as a director. I am also a guarantor of a 24k, for a factoring company supporting our business. I was offered 32% of the business but as i check in company house, only 20% is registered under my name. This starting to ring an alarm bells, so before i will organise a meeting with the other directors i would like to seek an legal advice. I need to know what should i do to secure my position, or if that is not possible how to leave the company, so i am no longer a guarantor
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi

Thank you for your question and welcome.

My name is XXXXX XXXXX I am a company law expert.

Can you let me know the following:
- Do you have share certificates for 32% of the shares?
- Do you have a shareholders agreement?
- When you were appointed a director did you sign a form AP01?
- Do you have access to the company's financial records?
- What is the current indebtedness of the company to the factoring company?

I will be online periodically this evening so please do not be concerned if you do not her from me right away. I will be typing a full response and will post it by the morning at the latest.

Kind regards

AJ
Customer: replied 3 years ago.

Thank you Alex


 


I do not have a any share certificate, and i wasn't given a shereholders agreement.


I was appointed a director in december 2011 and i didnt not sing AP01 form, but i have found it on companies house, where the structure of the company stated that i have 20%


I have got access to the company's financial record.


I was working for this company since 2006, and in 2011 when i was pregnant , we had a big client going bankrupt, leaving the company with a massive debt. I was on maternity leave when they offered me a shares on the company, as they had to sing a company voluntary agreement to avoid closing the business down. I was under pressure, to keep my job to agree to join the company,and as you can understand, with me being 7months pregnant i wasn't able to seek for a job.


I was told that the only way to save the company was if we will all take guarantees, and this i calculated on the percentage the business. My guarantees are for 24k and the other directors for 25k. This all was making sense to my, as they said own a 32% and the other 2 directors own 34%. I have discovered few weeks ago that the split between us is not 32,34,34 but 20,40,40.


I always trusted them very much and i just didn't even thought that something is wrong. I didn't know i need to sign an agreement, or that something like a share certificate exist. I feel i was overused and i don't know what to do....should i leave and how to leave , if i am also a guarantor. I dont want to take this to court, unless i wont have any other choice, i just want to leave, and start a job in similar business. I think i cant work here any more due to a trust issue.


i am loosing my mind, my business partners would normally be the people who i would go for an advice and i have no one else here who can help me.


 


Regards

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I understand your predicament, it is never pleasant to believe that your business partners are behaving under hand, however there will be a way out of this, it really just depends on how you negotiate it.

To clarify your position just holding shares in the company alone is not an issue it wont cause you to suffer any personal loss.

What I suggest you need to do is the following in the following order:
1. Release yourself from the guarantee;
2. Resign as a director;
3. Then sell your shares back to the other shareholders or the company. If they refuse to do this, enter into a shareholders agreement to protect your shareholding until such time that they can be sold.

Moving forward I really need to know the following:
1. Do you have anything in writing confirming your entitlement to 32%;
2. What is the current indebtedness of the company to the factoring company?
3. Are the shares actually worth anything? Is the company now solvent?

I look forward to hearing from you.

Kind regards

AJ
Alex J. and other Law Specialists are ready to help you
Customer: replied 3 years ago.

Hi Alex


 


No, i don't have anything in writing.


Company is currently in CVA and untill 2017 will be in red, as that's when debt is written off. We are currently 200k in red, but 2013 profit was around 6k


How can i release myself from guarantees?


I just want to leave this company, i feel that i cant trust them, and i would rather to go away and work for another company.


Here is another question, as i have a very good relationship with my clients, if i would work for another company, can i contact my current clients to let them know that, and offer them service somewherelse?


 


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

In relation to the £200k? How much of this is owed to the factoring company?

You can go an work somewhere else and contact the clients, if you have resigned as a director and your employment contract does not contain any restrictive covenants preventing you from poaching clients.

The problem is I would not resign as a director until you are released from the guarantee. As a negotiating point and as the shares are potentially worthless I would consider offering the shares back in exchange for your release from the guarantee, the factoring company will need to agree to this that is why it is essential that you know what the exact indebtedness is to the factoring company.

I look forward to hearing from you.

Kind regards

AJ
Customer: replied 3 years ago.

We don't actually owe money to the factoring company, but they are supporting us with 85% of total amount we invoicing every week. Its a recruitment company, so we have to pay our employees every week, and clients are paying within 30day. Here is another question, my contract of employment has been sing by myself in 2006, when i was working for this company on different position. I believe they do not have a copy any more (i may be wrong, but i am almost sure). I still have a copy, and it does say that i am not allowed to seek for an employment in any our clients company, unless they will agree in writing that i can, and that i cant use any details, unless they are public details. All contact details of my clients can be found online. There is nowhere an information that i am not allowed to to poach my clients. Can i email you a copy of my contract so you could just double check if i am right?


Also there i a person in my office who would be able to take my guarantees with my shares on.


 


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Can you past a copy into this link and redact any personal information?

You will need the factoring company to agree to release you by a deed.

The fact that there are no arrears on this indebtedness is positive. Do you think the person concerned will only agree to take your proportion of the guarantee for your shares?

Kind regards

AJ
Customer: replied 3 years ago.

I will email you my contract later in today. I think this person will take the same guarantees as ive got. Whats my options if bank wont agree to release me from being a guarantor? Of if this person wont want to take this deal? Or my business partners wont allow me to resign from being a guarantor ?

Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

Do you know how long the factoring contract lasts for?

Normally they are a year by year basis?

Kind regards

AJ
Customer: replied 3 years ago.

Hi Alex


 


Factoring contract is a 2 year contract and is due for renewal now. We owe between 160-200k, and this figure may be different every week, depending on total invoicing etc.


Please find attached part of my contract, regarding confidentiality and restrictions

Customer: replied 3 years ago.

I dont know if those attachments are sending properly, as my scanner doesnt work, so i can only send you a picture of my contract.

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I just got it. It will take me some time to review it so will respond to you as soon as possible, but by tomorrow at the latest.

Kind regards

AJ
Expert:  Alex J. replied 3 years ago.
Thank you.

Kind regards

AJ
Expert:  Alex J. replied 3 years ago.
Hi

My apologies for the delay. I am reviewing this now and will post a response in the morning.

Kind regards

AJ
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I have reviewed these provisions.

They are essentially non solicitation provisions. For six months after the date when you stop being an employee of the company c essentially you cannot entice any of their employees or approach or accept instructions from any of their clients for a period of 6 months. This wont stop your ability to work, and I think any restriction that stopped you from accepting employment else where would be unenforceable.

I would note that any future employer could be held jointly liable with you if they entice you to breach these restrictions, so I doubt for the first 6 months of your new employer you would allow you to breach these restrictions anyway.

Can I be of any further assistance?

Kind regards

AJ
Customer: replied 3 years ago.

That is actually great news, as i am not planning to contact my clients but wanted to know if i can in a future.


Just a last question, if for example our factoring company wont release my fro, being guarantor, what are my options?

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

The factoring arrangement will be for a fixed term at which point it will be a rolling contract. They cannot keep you to the guarantee for ever so once the factoring agreement is out of term then you should terminate it asap and then they will have to release you from the guarantee. In the mean time you should hold onto your shares and remain a director until you are released.

Alternatively you can ask the other directors for an indemnity against the guarantee, but bare in mind any indemnity is only as effective their solvency.

Kind regards

AJ
Customer: replied 3 years ago.

Dear Alex


 


What should i do if i would like to stay? How to secure my position? Or do you think i shouldn't consider that option?


 


Anna

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

If you are going to stay, then you should stay on as a direct and try and secure a release from your guarantee at the earliest opportunity.

If the company is not worth anything and you are not drawing a salary, you have to consider what will expose you to as little liability as possible.

Kind regards

AJ