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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?
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.
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.