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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3497
Experience:  Solicitors 2 years plus PQE
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We have 2 directors on a company set up in January 2012. In

Customer Question

We have 2 directors on a company set up in January 2012. In July this year it was discovered that 1 of the directors had set up another company in a very similar name and obtained contract using the portfolio of joint company. Is this legal?
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. Is this director of the company also a shareholder? Kind regards AJ
Customer: replied 1 year ago.

Yes, there is 2 directors and 4 shareholders (x2 husband and wife teams)

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. The director is committing various offences under the Companies Act 2006 and breaches of fiducairy duties including:(i) Duty not to make a secret profit;(ii) Breach of the various sections under S.172-177 of the Companies Act 206- failure to avoid a conflict of interest, failure to act with independent Judgement or act in the best interests of the company. What do you want to do going forward? Can you continue working with this person? Kind regards AJ
Customer: replied 1 year ago.

My husband has been trading as a sole trader for many years as plant hire/groundworks contractor. When we started the other company in 2012 we were to supply plant and the other director had architect contacts. During a year there would not always be enough work for both my husband and other director, perhaps for 7 months of the year. During this time my husband as sole trader would do projects not related to golf course construction in anyway. All parties were made aware of this at the start. Enabling the other director to continue with the small projects as the company. This way all parties would have an income and ability to pay bills. The way they have gone about it is wrong and obtained this very large contract of 10 months using the portfolio built up within the golf course construction industry together. They have left us no choice but to complete the work commitments alone and no doubt will expect dividends. As of the end of October there are no future contracts assigned to the company. As far as we are aware they are using the emails and website of the original company. Our intention is to part company

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. Have you proposed that they buy out your shares and part you ways? Do you still own the plant and machinery? Kind regards AJ
Customer: replied 1 year ago.

The company has to remain trading for at least another 12 months as retentions on some of the contracts. Have thought about them buying us out to be honest. Yes thankfully we still own our plant and in process of building the sole trader business back to where it was over 3 years ago.

Expert:  Alex J. replied 1 year ago.
Hi,

Thank you.

You could consider suing then and asking a court to order the dissolution of the company on the basis that this was a failed partnership, but it seems like you would lose a lot of value from the company.

If you start making accusation about breaches of the Companies Act you will lose the opportunity to negotiate.

Is it worth sitting down with them and proposing having an independent valuer come and value the company? They can then purchase the business from you at a rate agreed by that valuer?

Kind regards

AJ

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