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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3497
Experience:  Solicitors 2 years plus PQE
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HI, My partner and I are both equal shareholders in a security

Customer Question

HI,
My partner and I are both equal shareholders in a security business. She is the Director while I assist when I can from time to time. There is a strong possibility that the business could be fined by the regulators because there were a few employment and contract documents that were meant to be submitted but we missed the deadline. This is matter that should only result in a small fine and a non conformity being raised against the business. Unfortunately, the regulators have informed us that they will be seeking to prosecute my partner and the business.
The business is just growing and in the process of signing long term contracts with new clients. The business can afford the fine but if my partner is prosecuted then it could affect the business.
Since I am a shareholder and I have the required licence to run the business, I was wondering if it might make sense to open a new company with me as Director and sell the exiting company to the new company absorbing whatever fine there might be but informing the clients that the company has changed ownership and still retain their business.
I am of the opinion that if my partner is found guilty and in the worst case disqualified to be a director, we can still continue to run the business with me as the Director of the new company and she providing me admin support.
I will really like your professional opinion on the matter.
Thanks.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Does the company have any creditors?
Does it have any long term customer contracts or key supply contracts?
Kind regards
AJ
Customer: replied 2 years ago.

Yes the company has creditors and long term contracts in place.

Expert:  Alex J. replied 2 years ago.
Hi<
Thank you.
The main issue is that your creditors will have to either be paid off, or you will have to agree for them to be transferred to new co.
Also you will have to check your long term supply and customer contracts and check that they do not have change of control clauses and they can be easily transferred if the business is sold as a going concern to a new company.
Does the company have any employees?
Other than the directors risk of being struck off, what would be the concern of you talking the reins of the old co?
Kind regards
AJ
Customer: replied 2 years ago.

Ok Thanks. I think it might just be easier to take over the existing company.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
What are your concerns around the existing company?
Loss of goodwill? Finances etc?
A director only assumes personal liability in limited scenarios and these tend to be where they have traded a company knowing it is insolvent. As long as you are satisfied that the company is a viable business then assuming directorship of the company should be fine?
Kind regards
AJ
Customer: replied 2 years ago.

Many thanks for your insight. The main concern is loss of goodwill.

Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
Would this be as a result of a fine from the regulators? IS there anyone to keep this discreet?
How serious is your breach?
Kind regards
AJ

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