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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3652
Experience:  Solicitors 2 years plus PQE
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I am an employee and shareholder in a private company and I

Resolved Question:

I am an employee and shareholder in a private company and I wish to pass on to the shareholders an issue that would be a concern and impact on the value of the company. What is my position with regards to "whistleblowing"?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Does the company have a whistle blowing policy? Does the issue relate to fraud or money laundering? Kind regards AJ
Customer: replied 1 year ago.

I am not sure if they have a whistleblowing policy. It is quite a large private company with £1.5 billion turnover and I am asking on behalf of my daughter who is the employee and shareholder.

No it does not refer to fraud or money laundering.

She has received within the company a negative Brand Equity report which she wants to pass on to a group of large shareholders who have no knowledge of the possible short and long term impact it will have on the company if not addressed. She wants the Board to know about it and if the Board should then inform shareholders of the deteriorating situation. She says the company do not want to disclose or discuss the issues within that report.

Thank you

Customer: replied 1 year ago.

Await response to my last enail.

Thank you

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Who actually produced the report?
Your daughter's obligation is to her employment contract and to keep confidential matters of the business confidential. Unfortunately this conflicts with her interest as a shareholder.
If she wants to whistleblow (and her bosses will not take her seriously) she will have to consider the merits of potentially resigning and then disclosing what she knows - she could then look to claim constructive dismissal. This is really extreme action though - in the first instance is there anything her bosses (or the board) have told her about why they will not release this report?
Kind regards
AJ
Alex J. and other Law Specialists are ready to help you
Customer: replied 1 year ago.

She is certain they do not want to discuss. It is not a "confidential" document or marked a such and has been circulated within the company in a small way but to managements displeasure.

If she does inform the shareholders what is her legal position and the consequences thereof? ( She may have done already?!)

Has she committed and illegal offence? Could they dismiss her immediately without compensation. She also wants to know whether the Board should keep shareholders of this private company informed as to Brand Equity on a rolling basis particularly as it does impact on shareholder value.

Customer: replied 1 year ago.

Apologies

Forgot to mention

The report was commissioned by independent experts by management.

Thank you

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. She wont have a committed a criminal offence but the report itself may be confidential to anyone outside the company. Also it may make her relationship with the board untenable. Does she know why they wont release (other than it is negative) - do they not agree with it? If the directors of the company are not acting the best interests of the shareholders they may find themselves in breach of their obligations under S.172-177 of the Companies Act 2006 - that is to act with reasonable care and skill and act in the best interests of the company as a whole.Does your daughter have any support to disclose this?
Customer: replied 1 year ago.

Any disclosure would only go to the Board via the shareholders who are concerned. She has told me that she "has" disclosed!!!! and a note has just been sent out as follows. The Company do not know who it is of course.

the note is as follows:-


Illegal Obtained Report


I have been contacted by the Company Chairman, on behalf of the board on a very serious matter. A family shareholder has unethically received an internal company report on Brand Equity. It has been made clear to me that this is company property and therefore illegal regardless of it's content. The report itself is just one part of the company strategy process.


Unfortunately this has resulted in a breakdown of trust between the management and the family as well as damaging to our family governance.

My daughter definitely has support in disclosing this form although she has only discussed with myself and one major shareholder

Customer: replied 1 year ago.

The company is nowhere near the cusp of insolvency. The balance sheet is strong.

Customer: replied 1 year ago.

Look forward to receiving reply to last emails at 10.14 and 10.28.

Thank you.

Expert:  Alex J. replied 1 year ago.
Thank you if she has already made the disclosure -is not best that she just keeps her head down. Presumably the board will now be under pressure from the shareholders to look into the validity of the report? How many of the directors are also shareholders? Kind regards AJ
Customer: replied 1 year ago.

All are shareholders including 2 Executives.

The Chairman and the Board accept the report in the context that it only forms part of the Strategy and the shareholders that have received the report it has been suggested by the Family NED's that the Chairman will respond to their questions on the issues that arise from that report. I guess it will be dealt with at the next quarterly shareholders meeting when the company will respond to those issues in detail

At present only myself and one other shareholder know where the "leak" has originated and intend not to say anything. The document has been circulated to some within and not as a confidential document and the company are asking questions of the marketing dept but not of my daughters as yet.

Are you saying she should say she is the culprit ? If she does nothing what are the consequences? Her HR report has been outstanding for the last three years

Regards,

BMB

Customer: replied 1 year ago.

If the Company continue to search for the culprit and question her should she remain silent. They can't prove she is the culprit but may suspect. If she comes out and admits she has passed on the information they will probably want to get rid of her? Can they summarily dismiss her without pay etc?

In essence is your advice that she should continue to remain silent if questioned and see what happens?

She loves her work and only wants the company to succeed and as mentioned before has received "outstanding" in her HR reports. She feels strongly that the Board appears to not be challenging the Company enough on several matters. This is the first time she has ever discussed internal matters with me in 13 years!