How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Alex J. Your Own Question
Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3696
Experience:  Solicitors 2 years plus PQE
13113900
Type Your Law Question Here...
Alex J. is online now

I am one of 3 directors at a limited company trading for 15

Resolved Question:

I am one of 3 directors at a limited company trading for 15 years, one of the other directors and myself are 50% shareholders each, the third director does not hold any shares.
In the past we have upgraded our home PC's equally as they are also used for the business from time to time, when discussed recently both I and the shareholder director agreed that the funds should be used elsewhere.
I have recently discovered that the other shareholder director has used the company credit card to purchase £1000 of computer equipment for himself personally, and has since lied to cover it up, he said they bought the equipment with their own money but the credit card statement and invoice show otherwise.
I don't want to dissolve the company, but obviously there is now a level of distrust, please could you advise what my options are?
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.
Has he repaid the money since?
Do you have a shareholders agreement?
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ,

I have not confronted him about the issue yet, I have only asked him when he last upgraded his home PC with works finance and he stated he paid for it himself. This was 2 months ago, and I can see the credit card statement and invoice for the equipment, there is no Credit on the bank statements for these amounts from him. The request to repay the money hasn't come up.

We do not have a shareholders agreement.

Thanks...

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Firstly you should approach him and ask him to repay the money. If it was not approved may be there is a valid explanation.
In terms of other options you can consider:
1. If you want to carry on in business together you should enter into a shareholders agreement. This can include pre agreed restrictions on company spending and borrowing for example you could include a clause that says that any spending over £250 must be approved by both shareholders. You can also include a mechanism for exiting, for example if you get an offer of £X for the business you pre agree to sell.
2. The other alternative - is you come to agreement to sell your shares to him or buy his shares;
3. If he does not repay the money you could commence a derivative action against him under S.260 of the Companies Act 2006 for breach of his obligations to act in the best interests of the Company under S.172 of the Companies Act 2006.
I personally think Point 3 is a bit extreme and is a last resort, however if you want to carry on in business any issues of trust can probably be over come with a sound shareholders agreement. Whether you can agree this really depends on how he reacts when or if you confront him on the issue.
I look forward to hearing from you.
Kind regards
AJ
Alex J. and 2 other Law Specialists are ready to help you