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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3695
Experience:  Solicitors 2 years plus PQE
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I am a director/employee of a company owning 39.5% of the shares.

Customer Question

I am a director/employee of a company owning 39.5% of the shares. Mr Lee Giltinan is also a director/employee of this company owning 39.5%. Mr Trew invested £50000 into the busines when it started for 20% of the shares. Mr Gregson employee owns 1% of the shares.
Mr Giltinan has now made a payment of £27500 to Mr Trew for the first repayment of his "loan". Yes he is now saying that the investment was a loan. He has done this without consulting me. There is no loan agreement. Where do I stand?
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. How is the £50k listed in the company accounts? Is it listed as share capital?
Expert:  Alex J. replied 1 year ago.
Did the company have any assets when the business was started and did you pay capital or assets into the company?
Customer: replied 1 year ago.
On the computerised Sage accounts it is listed as Share Capital. Mr Trew put in £50000, Mr Giltina, myself and Mr Gregson put in £5000 each
Expert:  Alex J. replied 1 year ago.
Hi thank you if it is listed as share capital then you would need a shareholder resolution to convert the shares into a loan. They cannot unilaterally decided it is a loan - there are various options open to you - I will explain them in turn but can you confirm whether you want to keep working with these people going forward? Is the company currently solvent?
Customer: replied 1 year ago.
I would imagine that if I pursue this then I will be unable to continue working here. Mr Giltinan is also supposed to have bought Mr Trew's shares . I believe they have concocted the story along with our accountant and that the payments are actually for Mr Trew's shares. But I cannot prove this. the company is solvent
Expert:  Alex J. replied 1 year ago.
Hi thank you for your email. My apologies for the delay. Essentially what they have done is transfer the shares from to the other and got the company to pay for it? Do you have a shareholders agreement?
Customer: replied 1 year ago.
No. Nor a directors agreement. Mr Giltina has now informed me that I have to prove that it wasn't a loan. is that right?
Expert:  Alex J. replied 1 year ago.
Hi thank you. Do you have a copy of the last statutory accounts? Is the money listed as share capital or debt in the statutory accounts?
Customer: replied 1 year ago.
Our company is Olympus Electrical Wholesale Ltd. You can find our account at Company House. I can only find on our sage accounting system that it is listed as share capital
Expert:  Alex J. replied 1 year ago.
Hi. Thank you. My apologies for the delay. If the money is listed as a share capital they won't be able to convert it to debt (lawfully)without at least shareholder approval and possibly a solvency statement from the directors or auditors. The problem is if the company goes insolvent the directors could be personally liable for the debt as a preference of a creditor or an unlawful disposition of the company assets. You have a potential protection under s.994 of the Companies Act 2006 from unfair prejudice as minority shareholder but this is an expensive last resort. Would the other shareholder be prepared to buy you out?
Customer: replied 1 year ago.
Yes he would but at a ridiculous price. On paper my shares are worth £350,000 he has offered £60,000. But I know shares are only ever really worth what you are prepared to negotiate
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. Aside from the share capital that has been unlawfully removed - does the company have any assets that support this valuation. If you brought an application for unfair prejudice under S.994 one of the remedies is the court can order your shares be purchased at a fair price, however as I said this is a last resort. Have you proposed appointing an independent valuer to agree a binding valuation for the shares as a way of letting you leave the company? If you ask yourself this question, do you actually want to fight in court to keep the company going and correct this wrong doing or make a clean break at a fair price for your shares?
Customer: replied 1 year ago.
I guess I would like to make the break. However getting the right price is not going to be easy. I got my figure originally from our accountant, but there's no way my partner would pay that and no one else is going to want to invest.