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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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How to close LTD Company with two directors - owners (each

Resolved Question:

How to close LTD Company with two directors - owners (each with 50% shares) and one does not want to close the company?
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts :

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.

Alex Watts :

Is there a Directors agreement please?

Customer:

Hi Alex,

Customer:

Thank you for your quick response

Alex Watts :

No problem

Customer:

there was no agreement as such, however the ownership has been established during registration at Cmpany House

Alex Watts :

Ok - are you that wants it to close or stay open?

Customer:

i am the one who wants to close

Alex Watts :

What do the articles say please?

Customer:

I am sorry what articles do you mean?

Alex Watts :

Articles of association

Customer:

I haven't used any articles of association

Alex Watts :

Ok.

Alex Watts :

I am sorry to say it is bad news the

Alex Watts :

then

Alex Watts :

To close a company you need a formal Company resolution.

Alex Watts :

To get this you need a majority to pass it

Alex Watts :

As it is 50/50 you cant get that

Alex Watts :

You can resign as a Director but you would remain as a shareholder

Alex Watts :

But if someone wants to stay sadly there is nothing you can do

Alex Watts :

The Company needs 51% vote in order to dissolve the Company which sadly you cant get

Alex Watts :

I realise this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

what about 'wrong doing' the partner who I went into partnership

Alex Watts :

If you had a Directors agreement or articles of association, you may have been able to invoke a clause

Alex Watts :

The partner may be 'wrong doing' but you have no power

Customer:

did not advise me he had a criminal records

Alex Watts :

There is no Directors agreement

Alex Watts :

There is no articles of association

Alex Watts :

Sadly whether he has convictions does not matter.

Alex Watts :

If you asked him whether he had any and he said no - that is a different matter

Alex Watts :

But not disclosing them in itself is not an offence

Customer:

so do I understand correct that the only option is me leaving the company

Customer:

?

Alex Watts :

YEs

Customer:

but he would keep all the assets

Alex Watts :

But you remain a shareholder unless you give that up too

Alex Watts :

Yes he would

Alex Watts :

But if you remain a shareholder you own 50% of the assets

Alex Watts :

The problem is you do not have a Directors agreement

Customer:

what about if the company does not do any business for more then 3 months?

Alex Watts :

Then you could apply to dissolve it - but again there must be a board resolution for that

Alex Watts :

51% majority

Alex Watts :

Can I clarify anything for you?

Customer:

one more question

Alex Watts :

Of course

Customer:

do assets considered as anything which has been bought by the actual company?

Customer:

if I bought domain in my own name it is mine?

Alex Watts :

Potentially if you purchased it yes

Alex Watts :

Out of your own funds and it is your name

Alex Watts :

If the Company paid for it, it would be questionable whether it was your property or the Company

Alex Watts :

Yes

Alex Watts :

Does this help?

Customer:

yes it does, one more thing if I may

Alex Watts :

Of course

Customer:

if I want to make his life hard and sell the domain

Customer:

or use it for my new business

Customer:

can I do this?

Alex Watts :

ok

Alex Watts :

You wont be able to use it for your new business as this would be passing off on the old name.

Alex Watts :

If you paid for it out of your own funds then potentially you could sell it

Alex Watts :

But again - the remaining Director might try and claim it as an asset and seek an injunction to stop you

Customer:

could he sue me for that?

Alex Watts :

Potentially

Customer:

If I want to buy him out

Alex Watts :

Yes you can

Alex Watts :

Or he could buy you out

Customer:

how do I establish the price/cost?

Customer:

as he could say he wants a 1milion

Alex Watts :

You would need to see an accountant for tat.

Alex Watts :

I can't give you advice on asset value

Customer:

so he could estimate the value of the company?

Alex Watts :

An accountant could yes

Customer:

do I have any other solution?

Customer:

As I just want to get out of this business

Alex Watts :

I do not think so.

Alex Watts :

I understand.

Alex Watts :

Sadly you have no agreement so your options are limited

Alex Watts :

Can I clarify anything else for you?

Customer:

if my partner has the stock in his house

Alex Watts :

OK

Customer:

how can I get it back, as I own half of it?

Alex Watts :

You dont own half. The Company owns the stock

Alex Watts :

You own half the company

Alex Watts :

This is not a partnership

Alex Watts :

You own a share of the company, not the stock

Customer:

so how can I get this back?

Alex Watts :

You can't - it does not belong to you. It belongs to the Company

Customer:

the stock has not been paid

Customer:

and he does not want to pay the supplier?

Alex Watts :

But that is a matter between the Company and the Creditor

Alex Watts :

The Creditor could come and take it back if their terms allow that

Alex Watts :

Can I clarify anything else?

Customer:

is there are a way of getting anything from this company when I leave?

Customer:

anything?

Customer:

I don't want to leave everything to this person who can run it

Alex Watts :

Yes I know but your options are limited as you do not have a Directors agreement or articles of association

Customer:

oh dear...

Alex Watts :

Sadly only in hindsight people realise how important these documents are

Customer:

what about the fact that the company is registered in my flat?

Alex Watts :

Makes no difference whatsoever

Customer:

can I change the address, or he can actually keep the company in my address as long as he wants?

Alex Watts :

Yes you can change it of course.

Alex Watts :

If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.


Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.


 


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Customer:

thank you very much for today I really appreciate your help

Alex Watts :

No problem - all the best

Customer:

thanks

Ash and other Law Specialists are ready to help you