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MatthewM1117
MatthewM1117,
Category: Employment Law
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My partner and I have run a business fir 2 years together,

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HiMy partner and I have run a business fir 2 years together, he has always been the only director, I now am trying to decide which is the best option for myself,should I also become a director or a shareholder? Or both?Thank you

Good morning, thank you for contacting Just Answer my name is***** am a solicitor and I will be assisting you today.

This is a personal decision for you and your partner however if you can provide me with some further background about the business, your role, your partners role, time spent working for the business etc I will try to point you in the right direction.

Customer: replied 13 days ago.
The business was set up just before I met my partner and had a turnover of 50k - we now have worked together to have a turnover of 1.5m last year and 1.8m this year, and both years he has drawn approx 160k in dividends which we use to pay all bills and are saving for a house deposit together.I am responsible for all back office responsibilities so accounts, admin, website HR etc, he is the client and staff face.
I would probably be looking at a third share if I went down that route.Our relationship is not working currently and so to protect myself as currently I don’t have a contract or any real wage we have agreed to put measures in place should things not work outThanksWe are now discussing this

Thank you for the confirmation, this does make sense, is your partner happy to make you either a shareholder, director or an employee?

Customer: replied 13 days ago.
he is happy to go with whatever I feel is best to protect myself in the future

Thank you for the confirmation, the shareholders and directors have two completely separate roles in the company. The shareholders own the company by owning its shares and the directors manage have the day- to-day control over the company.

Your role appears to be all encompassing and it would be advisable that you become a shareholder and a director as you are clearly involved in the day to day management of the company.

What percentage of share you and your partner agree would be personal, however as I am advising you, and it is clear you have invested considerable time and effort getting the company up to where it is today it would be sensible to request a 50/50 split with your partner. This would protect your position within the company as best as possible.

As a director, there are two options executive or non executive director given your role I would advise that you should become an executive director and the primary advantage of this is that you are also an employee of the company and with this you will gain statutory employment rights.

I think it would be prudent (as you have mentioned)  that if you and you partner decide to go your separate ways what would happen to the company, would you sell your shares? Would you retain shares but step down from being a director etc.There are numerous options and some form of contract stating this would be a worthwhile investment as disputes between shareholders/directors can be unnecessarily lengthy and considerably expensive.

Customer: replied 13 days ago.
That’s great advise thank youRegarding the contracts etc is this something we can get the accountant to do or do we need to hire a solicitor to draw this up?Usually the accountant handles these things

Glad to be off assistance, I would advise that you get a solicitor who specialises in commercial/contracts to draw this up for you.

You can use locate a solicitor on the law society website, you can use quick search, select company and commercial under the business header put in your postcode and a list of local solicitors will be generated. the link is below:

https://solicitors.lawsociety.org.uk/

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