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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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company law shareholder disputes

Resolved Question:

Questions:-

 

Our company is called The Bark Park – registration number – 9051859 I was made redundant last year and decided to set up a small business with a friend – we did not enter into a shareholder agreement, there is nothing in writing.

We were both initially Directors and both invested £10K in the business to set it up.

We both worked at the business without taking a wage for 6 months.

After some time it was apparent that I could not continue to do this as my redundancy was running out and my friend and I did not see eye to eye and things were not great.  She suggested I resign as a director and keep my shares which I did, stupidly but I was bullied into this as without enough knowledge otherwise.  She is still a director and shareholder.

 

When we set up the company we used accountants to set this up and we both were given 1 share each at a cost of £1 – therefore we were 50% shareholders each.

 

I still have £10,000 invested in the company for which she has agreed was a directors loan, the company is paying me back at a ridiculous £25 per week as she says that’s all they can afford.

 

Can you tell me the following:-

 




  1. Am I classed as a 50% shareholder is just 1 share?? Am I classed as a part owner? She says im just a shareholder have no rights.




  2. If I want to sell my shares I have to get her to agree apparently – she told me we have to have a meeting and vote but there are only two of us so how can we vote.  Therefore who has the vote at a meeting – deadlock ?




  3. The agm she will present the accounts and I believe it will be very unpleasant – how can we vote if we both disagree ?  who has the say over who?




  4. She is looking at adding another investor – can she do this without my permission, can she dilute the shares without my permission.




  5. Can I ask for independent accounts audit as I don’t trust her accountant or her.




  6. I note that she has used the company bank account to pay for fuel and paid herself a wage in December after I left – can she do this ?



Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

1) Yes even with 1 share you are 50% shareholder if you have 1 share each

Alex Watts :

2) You can sell the shares to whoever you want, unless there is an agreement to the contrary that says you need the others approval

Alex Watts :

3) As for the accounts, they must be approved by the majority. If not then they are not agreed.

Alex Watts :

4) Yes she can look for another investor but you will still own 50%. It can't be diluted down without your permission

Customer:

but there are only 2 of us so how can there be a majority?

Alex Watts :

5) She can only pay for business relared expenses.

Alex Watts :

Exactly.

Alex Watts :

But your articles of association should say what happens with a deadlock

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

her accountant told me that we have to have a meeting if I want to sell my shares and vote? is this wrong then

Alex Watts :

This only happens if it says so in the Articles of Association

Alex Watts :

Otherwise no

Customer:

ok so I need to read the articles.

Alex Watts :

Yes you do. It will all be in there

Alex Watts :

Does that help?

Customer:

yes somewhat - can she add shares to dilute mine?

Alex Watts :

No, not unless the Articles says she can

Customer:

ok thanks Alex best read the articles and see if I can make sense of them - if not can I pay extra for you to read and confirm for me?

Alex Watts :

Yes of course it would be a pleasure to help.

Alex Watts :

Can I clarify anything else for you at the moment?

Customer:

nope thanks that's great

Alex Watts :

Great. If I could ask you to rate my answer before you go today please, the button should be at the bottom of the screen

Alex Watts :

If you need more help please click reply?

Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience: Solicitor with 5+ years experience
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