I want to understand what our legal position is here - My business partner and I built this company from nothing and I am not prepared to give 33% of it to someone who is going to do nothing. I am not prepared to give him anything.
The problem is I don't know what he is legally entitled to and I don't know how to approach the situation.
What is the legal viewpoint on him being able to gain a 33% shareholding if nothing was ever signed to agree this?
He never had a holding in the first place - he said "that once I receive written confirmation that I have been removed from the guarantee I relinquish any interest in *the company*"
His solicitor is saying that although this was never reduced to writing, the agreement was that the former director would:
1- become a one third shareholder in the company
2- provide consultancy services to the company and would be paid a fee of £1,200 plus VAT per month together with expenses, these payments to commence as soon as the performance of the company permitted.
We had a major falling out because I said I wasn't happy with him becoming a one third shareholder as he was only working 1 day a week and tried to renegotiate the 33%. He said it's 33% or nothing, at which point I said it's nothing.
He was angry because he had signed a personal guarantee (as had the other directors) on a £50k startup loan. He said if we didn't have him removed he would seek to gain 33% of the company through litigation. I agreed that we would have him removed as a personal guarantee if he relinquished any interest in the company and that there would be no further proceedings. He then sent me an email that said the following:
"I think I have made my position quite clear. I do not want to have further involvement in *the company* but you are still operating under a finance agreement that is supported by my assets. I have on many occasions stated I want this resolved asap but yet we seem to be ignoring these requests. I have in addition made it clear that once I receive written confirmation that I have been removed from the guarantee I relinquish any interest in *the company*. So I am concerned at why I have not been updated in nearly 1 month. In your email dated 25th March you asked for confirmation of my intent to disregard *the company* I really not sure what you are looking for hear as I have made it quite clear to both *the company* and *the finance company* that this is the case hence my instigating the processes in the first place, and highlighting this in numerous email communications."
I proceeded to have him removed as a personal guarantee. This process took 6 months because the finance company were being extremely difficult and we had to have him replaced with an alternative guarantee.
As soon as we had completed this, the former director had his solicitor send us a letter to state that "It is clear the full terms of the original agreement were not implemented, so the client requires completion of transfer of 33% of the shares in the company and the consultancy fee from May to August 2014 (when he didn't even work for us) and February to July 2015 (after he had resigned, but was still listed as a personal guarantee).
What I need to understand, is what my legal standpoint is. He is trying to get 33% of the company and £12,000 (plus VAT) in consultancy fees from me. He is trying to do this after sending me the email I listed above, stating that he would take no further action. I am not prepared to give him either of these things but I don't know what the law would say.
Nothing was agreed in writing but a 33% shareholding had been discussed. We never signed the paperwork for the shareholding.
He was also paid £1200 per month for the period he was a company employee, but he is claiming for 10 months outside this period.
If you can clarify the legal position around that I would be grateful.
Final question - what would class as an "agreement" rather than a discussion?