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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11147
Experience:  30 years as a practising solicitor.
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I own a business as a partnership. The other partner has

Resolved Question:

I own a business as a partnership. The other partner has invested approximately 20k as have i. They have today stated that they will be signing the business over to me 100% and taking their name off the companies house and also have started taking a loan repayment from the bank without a formal agreement or notice
Submitted: 11 months ago.
Category: Law
Customer: replied 11 months ago.
they have another company which they used to pay the initial 20k. I am concerned that they are trying to do something untoward
Customer: replied 11 months ago.
it is a limited company
Expert:  JGM replied 11 months ago.

Thanks for your question. I presume the £20000 each was put in by way of director's loans and that the other party now wishes to resign as a director and have their money returned and give up their shares. Is that broadly the position? Can the company afford the payment? Is there a shareholder's agreement?

Customer: replied 11 months ago.
the company can afford repayments but not at the amount they want right now . They want 650 a month for 36 months however i have not yet seen all of the paperwork proving the actual amounts they invested.
the agreement was verbal, it was to be 50/50 and when it started gaining capital then the loans would be repaid.
Expert:  JGM replied 11 months ago.

Unless there is a shareholders agreement or Articles of Association to the contrary there is no automatic right for a shareholder in a private to be bought out. In addition that that if the company is going to buy back the shares there has to be a special resolution of the company. You should stop any further payments until this is regularised by a formal agreement.

Customer: replied 11 months ago.
Does that then mean that the initial investment down not actually have to be repaid unless a formal agreement is made? I have also just spoke to the accountant and it seems that the figures submitted are wrong and is actually 8k less than they suggest?
Expert:  JGM replied 11 months ago.

Yes that is exactly right. They can just take money out without the company's agreement or some kind of mutual arrangement. That is theft essentially.

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