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Jamie-Law
Jamie-Law, Solicitor
Category: Law
Satisfied Customers: 5380
Experience:  Solicitor
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A small company with only 2 shareholders - the first holds

Resolved Question:

A small company with only 2 shareholders - the first holds 66% and the second holds 34%.
The first with 66% loans the company £100K (example).
2 years later, the majority shareholder starts to pay himself back lump sums of money without the second shareholders knowledge and while it was not in the interest of the company.
My question is, Is this Legal?
NB: 2 months later the majority shareholder looks to fold the company but instead sells it to the employees.
Submitted: 1 year ago.
Category: Law
Expert:  Jamie-Law replied 1 year ago.

Hello my name is ***** ***** I will help you with this.

Is the shareholder also a Director?

Jamie-Law and other Law Specialists are ready to help you
Customer: replied 1 year ago.
Hi Jamie,
Would it be better to chat quickly on the phone?
If not don't worry, Yes this gentleman like myself was also a director.
Christian
Expert:  Jamie-Law replied 1 year ago.

Happy to do so Christian, what is your number?

Customer: replied 1 year ago.
DDI is***********
thanks
Expert:  Jamie-Law replied 1 year ago.

Ok

Customer: replied 1 year ago.
Hi Alex,
I could not see anything in the articles to show where this could be allowed to be done without at least a) mentioning it to myself - Significant Minority Shareholder or b) to be in the best interest of the company.
I have attached the original doc just to see if you can shed any more light on this.
No rush but if we could speak briefly tomorrow it would help us to clarify if we have some grounding on this. Then we can assess if we will need to move forward to see if an alternately resolution can be found.
Expert:  Jamie-Law replied 1 year ago.

No, I cant see anything either.

Therefore the Director cant do this.

Does that clarify?

Customer: replied 1 year ago.
Hi Alex,
Yes it helps.
The only other clarification i would need is how i can expertise this information?
For example; Is this legally fraud? Is it just non disclosure and so means it a slap on the wrist but nothing we can do.What i would like to achieve here is to know if the contract (Management Buy-out) signed with out this information being disclosed and knowing he can not do this be challenged or take him to court if he refuses to either pay the money back to reassess the situation now we know what he did was not allowed.Thanks,
Christian
Customer: replied 1 year ago.
Basically with your advice, how do it put this to him so he is aware how serious this breech can be?
Expert:  Jamie-Law replied 1 year ago.

It could be, but also breach of contract by fraudulent misrepresentation.

I would look to recover the sums from him or say you are going to the Police or County Court

Customer: replied 1 year ago.
Thank you.