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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3656
Experience:  Solicitors 2 years plus PQE
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We suspected our boss of fiddling the year end figures in

Customer Question

We suspected our boss of fiddling the year end figures in order to lower the amount of dividends available for shareholders, so we left a recording device in the boardroom (which we have access to) and recorded two directors saying they will put in an accrual to reduce the profit. They know we will not be shareholders next year so they plan to take out the actual then and take it as dividends for them, is what they are doing illegal and can we confront them with the recording
Submitted: 8 months ago.
Category: Law
Expert:  Jenny replied 8 months ago.

Hello my name is ***** ***** I am happy to help you today. How long have you worked for your employer for?

Customer: replied 8 months ago.
Hi I have worked there 17 years
Expert:  Jenny replied 8 months ago.

Have you always been a shareholder for that period?

Expert:  Jenny replied 8 months ago.

How much money in dividends have you lost as a result of this?

Customer: replied 8 months ago.
No, I am part of a MBO team, 4 of us bought shares in feb 2015 with the intention of funding the buy out of the company partly out of dividends, our year end is end of February, and we were told that there was no dividends and the deal is now null and void and instead of buying the company in a series of share purchases they now want a single transaction for the full amount. They offered to reverse the deal and buy our shares back by using a Capital Reduction. We have now discovered there was a profit of £24K which they don't want us to get our hands on now we are pulling out of being shareholders, so they put in a fictitious accrual to bring the profit down to £12k so we get £600 instead of £1500
Expert:  Jenny replied 8 months ago.

I have been called away on something urgent so I will opt out of this so that someone else can pick it up. Do not respond otherwise it will come back to me and no one else will see it?

Expert:  Alex J. replied 8 months ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. What percentage of the share capital do you represent? How have you agreed a price for the share buyback? Kind regards AJ

Customer: replied 8 months ago.
each of the four of us have 8% .. they have said they can return the full investment but with strings attached such as only paying 2 people now and two at a later date, plus signing 3 year non competing clause
Expert:  Alex J. replied 8 months ago.

Hi, Thank you. Do you have to sell? If you have 32% between you, you therefore have a blocking stake so it is not like you can be unfairly prejudice. On the other hand you cannot force them to declare dividend, you need over 50% of the voting share capital to approve a dividend. If you know they are deliberately with holding value in the company and therefore devaluing your share, why dont you get an independent valuer in to resolve the dispute? If you are going to accept any delay in the payment of consideration for your shares I would insist on security, ideally a personal guarantee from the director?

Expert:  Alex J. replied 8 months ago.

Hi, Thank you. Do you have to sell? If you have 32% between you, you therefore have a blocking stake so it is not like you can be unfairly prejudice. On the other hand you cannot force them to declare dividend, you need over 50% of the voting share capital to approve a dividend. If you know they are deliberately with holding value in the company and therefore devaluing your share, why dont you get an independent valuer in to resolve the dispute? If you are going to accept any delay in the payment of consideration for your shares I would insist on security, ideally a personal guarantee from the director?

Customer: replied 8 months ago.
Thanks, ***** *****'t have to sell but now we know we can't trust them we don't want our money in. What would the legal position on the recording be?
Expert:  Alex J. replied 8 months ago.

Thank you. The recording is unlikely to be useable in a civil court but maybe useable in a criminal trial. You can however use the recording to make a detailed witness statement. Where was this individual when the recording was made? Kind regards AJ

Customer: replied 8 months ago.
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Customer: replied 8 months ago.
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