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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3493
Experience:  Solicitors 2 years plus PQE
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If money has changed hands in a private company,

Customer Question

If money has changed hands for shares in a private company, based on an intention to allot shares but this allotment has never got to companies house (6 months later) is that share purchase void? Can I demand money back?
Submitted: 10 months ago.
Category: Law
Expert:  Alex J. replied 10 months ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Did you pay the money to the company? Did you apply for the shares? Was the allotment authorised by the directors? Kind regards AJ
Customer: replied 10 months ago.
The allotment was authorised by the Directors. I paid the money directly to the Director whose shares in theory I was purchasing. The company still officially has only two shares, one held each by each of the other two Directors. There is a written intention, signed by the Directors, to turn those two shares into 100 000 and then my share would be 10% for working for 6 months for free ( no money changing hands, starting January 2015, which I did) and then I purchased directly a further 5000 for £1 each. The case is very muddy. I have been very stupid. The price was agreed on the basis that his parents had already purchased shares previously. What he actually meant was that they had given him some money a few years before. He therefore allotted a proportion of shares to them too. None of this has reached Companies House. The company was through this time (and still!) trading while insolvent as the two Directors and these same parents have large loans on the books. I did not know this until after the purchase of the shares ( I was told in August by their accountant). I have now resigned and want my money back.
Customer: replied 10 months ago.
After questions from me, they have now instructed the accountant to register the share changes with Companies House. I have now asked the accountant not to, in case there is any hope for me.
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. This is not an allotment at all, the company was not issuing new shares, you were buying shares from one of the directors. Did the director sign a form CON40G stock transfer form?
Customer: replied 10 months ago.
No, not that I ever saw. He only held one share at the time (and still as the allotment is still not complete) - could he therefore have sold the shares to me, if they didn't exist?
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. He could have sold you the shares conditional upon him either subdividing his shares or issuing himself more shares. If you have paid the director in his personal name, then that is who you would need to sue to recover the money from. If the company is now insolvent, it should not be registering any new shareholders. Has a liquidator been appointed?
Customer: replied 10 months ago.
No, because the loans are in the name of the two Directors and one of their parents they have agreed to keep trading and not call in the loans until the company can afford it. Other people owed have let the debt run until the money has come in, which it has with a big invoice before christmas of c.£30k. This has now been distributed so there are no large outstanding debts other than director and family loans. The company is about to be paid another large invoice (c.£30k) and then a further invoice of around £10k - a large part due to the work that I have done over the last twelve months. I am therefore wondering if there is a way that I can insist I am paid back out of either the total invoice from the company, or from the proportion that the director whose shares I bought is going to get. Can I force them to pay me while there is actually cash there in the next week or so? This is probably my only hope of extracting any money from them. If I can, how do I best do it?
Customer: replied 10 months ago.
They have said so far they will pay me for work done (around £7k, based on a calculation I don't agree with but it is something), the £5k I have asked for back that I paid for the shares they have said they will pay over a period of time from company future billing. There wont be any - so in effect this means I lose the money. The other 10% they are not prepared to make any deal over at the moment. The reality is that this could in theory equate to another £10k. Not sure if there is anything there that I can make stick? The £5k is definitely my priority as it is real money
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. In relation to the £5k, as you paid this to the director's personal bank account, you can always sue the director to recover it. Have you written to the director to confirm you want the money returned? Kind regards AJ
Customer: replied 10 months ago.
I have written and told them both I want the money back as part of my resignation letter. If I sue, what does that entail and will it be a fast enough process to stop him spending the money that is about to come through? Or giving it to the probable other armies of people he owes money to? How best do I get hold of the £5k now while the money is actually there?
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. You cannot force them to send you back the money just because it is there. If the director has a CCJ in his personal name that is likely to put alot of pressure on him to actually take you seriously. https://www.moneyclaim.gov.uk/web/mcol/welcome - you can start a money claim here.Did you sign any paper work with the director? Kind regards AJ

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