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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10525
Experience:  Barrister 17 years experience
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I work as a self employed free lancer in a company that has

Customer Question

I work as a self employed free lancer in a company that has a director with 60% share and set up the business and a company secretary who has 40% share (no dividends have ever been paid). They were a couple and have recently very acrimoniously split. The director wants to change the company so that he and i are employed by the company PAYE etc, no longer engage the company secretary who has been the adminstrator and fundraiser (self employed). He wants me to have her share and become a director with that 40% share. I am hesitant. what are the advantages and disadvantages of this arrangement?
Submitted: 1 year ago.
Category: Law
Expert:  Buachaill replied 1 year ago.
1. You need to be careful in this situation. The best method of entering into a relationship with the 60% director is to buy out the 40% shareholder, if she is willing to be bought out. HOwever, if this is not possible, then you should get the 60% director to resign as director and move and set up a wholly new company, completely separate from this existing business. A director cannot set up a competing business so long as he is a director. So this is why this 60% must resign and start afresh. I regret to say that unless the 40% shareholder is willing to be bought out, litigation is likely to result if you simply start to take business for a new venture, on the basis that this existing director has breached the fiduciary duties owed to the existing company by setting up a rival competing business.
Expert:  Buachaill replied 1 year ago.
2. Be aware that because of the relationship history and the possibility of Family law proceedings being ongoing, that both current shareholders are likely to be fond of litigation. So avoid direct conflict with either. Additionally, don't go investing your money until you have something in writing. This avoids litigation ensuing, which will wipe you out. Any new business must be completely separate from the existing business, or else, it must be a continuation of the existing business whereby one shareholder has agreed to be bought out. The bot***** *****ne is that you don't want to become the meat in a sandwich in a personal row between these these two former lovers!