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Matt Jones
Matt Jones, Solicitor
Category: Law
Satisfied Customers: 671
Experience:  I am a qualified and practising Solicitor with over 7 years post qualification experience
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I am a director and 50% shareholder in a company that I co-own

Resolved Question:

I am a director and 50% shareholder in a company that I co-own with my brother-in-law.
Due to our main customer's location and the bulk of the work we carry out is in the south west of England we have decided to open an office in Devon.
My brother-in-law wants to close our existing head office and move the whole operation and to the new office and make me redundant, can he do this given he has the same standing within the company as me?
Submitted: 2 years ago.
Category: Law
Expert:  Matt Jones replied 2 years ago.
Matt Jones :

I wil try and help

Matt Jones :

Do you have a directors contract of employment?

Customer:

No i don't belive so

Matt Jones :

Do you get a wage from the company?

Customer:

Both directors pay themselves a small wage plus dividends, these end up being paid every 2 weeks.

Matt Jones :

how many others are employed?

Customer:

there are approx. 12 employees at different levels within the company, one employee has recently been promoted to position of manager and has taken over some of my duties.

Matt Jones :

sorry could you bear with me 10 minutes. PLease post your reply and I will come back to you.

Matt Jones :

also how long have you been employed/a director?

Customer:

I started up the company in 2009, I have been employed/director since this date.

Matt Jones :

I am back

Matt Jones :

sorry about that

Matt Jones :

just putting my daughter to bed :)

Matt Jones :

Are there any others in line or just you? what justification is your brother in law putting on making you redundant?

Matt Jones :

are you still there?

Customer:

, no others in line , as the majority of our work is in Devon and not around our existing head office in Northants this seems to be his reason

Matt Jones :

OK thanks

Matt Jones :

well it seems you have 3 hats on in this situation, that of shareholder, director and employee. As far as the "employee" status is concerned you have been employed time to have the protection under the Employment rights act. Whilst redundancy is a fair reason such a decision should be handled fairly and so it may be that you have a case dismissal against your own company. As a director (assuming you both have equal decision making ability under the terms of the company details) then, whilst your brother in law can make a decision to make you redundant you have an equal voting right to vote against this decision.

Matt Jones :

as far as a shareholder this obviously cant be taken away from you and so you would still be titled to receive a dividend from the profits.

Matt Jones :

Does this answer your question?

Matt Jones :

Please feel free to ask questions.

Customer:

ok, thanks.

Customer:

how can I ensure that dividends are payed and not just re-invested into the company?

Matt Jones :

you are entitled to attend an annual general meeting yearly to agree the payments of dividends and you are entitled to see the accounts. If dividends are not payed equally the directors will be in breach of the Company Act 2006.

Matt Jones :

there is often a portion of the profits put back into the company to ensure its continued grown, but again this has to be agreed.

Matt Jones :

*growth

Customer:

Ok thanks, ***** ***** the position a bit clearer.

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