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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I am a 50% shareholder of a small LTD company V another 50%

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I am a 50% shareholder of a small LTD company V another 50% shareholder and sole director. There are 2 x 50k loans on the accounts for both me and him (one each). I believe this is incorrect and just put on the accounts to satisfy FCA regs for a company that needs to hold a level or assets. I want to challenge this as my name is ***** ***** the accounts as a debtor. My Q: can I request an AGM to ask questions regarding this? Also, I believe he is very friendly with the company accountant, so can I demand that the accountant is NOT allowed to attend the meeting. Therefore, just me and him so I can get answers?
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. Do you have a shareholders agreement? Did you ever actually borrow money from the company? Do the statutory accounts provide any explanation of the loan?
Customer: replied 1 year ago.

No shareholders agreement. Only model articles. As far as I am concerned, the loans were never provided. I believe they were logged on the accounts to show an asset for the company for fca purposes as this is a regulated company. I always assumed the money I received was a dividend and not a loan.

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. Did you ever pass an ordinary resolution approving the dividends? Does the company make profit to pay dividends? Kind regards AJ
Customer: replied 1 year ago.

No, there has never been a resolution to approve dividends. The business is a life asurance brokerage. Both myself and the other shareholder would sell policies to the public on behalf of the company, and then pay ourselves a level of money when the company received this (commission), usually on a weekly basis. The monies earned were always classed as dividends on the accounts for the year end. The company has never had any cash saving showing in the bank and therefore could never had provided a loan of any sort. I am no longer working at the company. I can only assume that the loans have been put on the accounts to show the business has assets, but this was never the case. I want to engage with the director regarding this, but he won't comply. Therefore I was wondering if I can demand an agm, so he will have to answer questions. I am concerned that if the company was wound up for any reason, that someone could come after me as I am showing as a debtor

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. Firstly yes you can force the director to call an AGM under S.303 of the Companies Act 2006. The AGM will however not allow you access to the accounts and financial information necessarily - only the director is entitled to this. The company is effectively deadlocked at a 50/50 share. Going forward do you want to continue working with this individual? In relation to the insolvency of the company, being registered as a debtor would cause you a problem if the company has creditors that must be repaid - however you will have a defence that you never accepted the money as a loan, it was commission for sales, and the company was solvent when the money was paid. I look forward to hearing from you. Kind regards AJ
Customer: replied 1 year ago.

Thank you Alex. You have been very helpful.

If I can't gain access to the business accounts, can I raise questions regarding these suspicious loans at the meeting. Surely by doing this, and if he declines to answer any questions, then surely this is evidence that I can keep if I ever need evidence, to say he would not discuss this with me. Perhaps he would sign written minutes to our meeting.

Expert:  Alex J. replied 1 year ago.
Hi, Thank you. Yes you should put these question on official records of the company, if the company ever went insolvent you would find it easier to defend yourself from personal liability if you can demonstrate that you tried to challenge the situation. If you cannot trust the director going forward you should either (i) Insist on a shareholders agreement to allow you transparency or (ii) Make arrangements to sell out your shares or lease the company. I look forward to hearing from you. Kind regards AJ
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