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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3840
Experience:  Solicitors 2 years plus PQE
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I joined a company 4 years ago to set up a new division carrying

Customer Question

I joined a company 4 years ago to set up a new division carrying out engineering works.
I was promised 12.5% share in the company plus an additional 10% bonus based on the profit.
Initially the company was to trade under the existing company but a new company was created that I was made director of and given a 125 share allowance for.
The offer was not formalised in writing.
The engineering side of the company started trading using the new company name but it operated under the main company.
First year of trading was just getting the company running but years 2 and 3 went well and I was paid a share of the profits based on 12.5% share + 10% bonus. However, my employee kept thinking of reasons not to separate the engineering side of the business from the main core business.
Year 4 did very well indeed, and my employer is refusing to pay me my share of the profit based on our original agreement as it is too much money in his eyes.
He also wants me to sign over my shares of the dormant company back to him.
What rights do I have without the original offer in writing?
I was the managing director of another company previously and he enticed me away from this company with this other. (The previous company offer me a 10% share to stop with them- I have his one in writing)
Submitted: 4 years ago.
Category: Law
Expert:  Ben Jones replied 4 years ago.

Ben Jones : Hello, my name is Ben and it is my pleasure to assist you with your question today. What evidence do you have of this offer?
JACUSTOMER-lxjju2xm- : The company name has been registered with me as a director, and125 shares have been allocated to me.
JACUSTOMER-lxjju2xm- : The company is trading using the registered name but the accounts etc are all operated through the main company. I have a detailed sheet from the company accountant detailing how my share/bonus payment was calculated last financial year. This shows I was paid as thou I had a 10% bonus and a12.5% share. This document also showed how the portion of the company overheads was calculated and apportioned to the newly formed engineering side of the business
Ben Jones :

Hello again, looking at your query in more detail this may be more of a corporate issue than an employment one so I will forward this to one of my colleagues who may be better placed to assist you. I think he is offline right now but I will send him a message and he will pick it up as soon as he is back - you will get an email when he has responded to your question.

Expert:  Alex J. replied 4 years ago.

Thank you for your question and welcome to Just Answer.

My colleague has asked me to look at this.

Did you sign a shareholder agreement or receive share certificates?

Kind regards

Customer: replied 4 years ago.
I didn't receive share certificates but the company was registered with me as a director and 125 shares are in my name.
The register company is not trading as a stand alone limited company at the movement. However it is trading using the same company name and working using the company name on all letter heads, orders and quotations etc. however all accounts are under the parent company.

The company accountant previously worked out my share of the profits by calculating the share of the company overheads that were apportioned to my side of the business. The payment was then calculated clearly showing a bonus payment and a pay calculated as a share divind end, albeit I had to pay full tax on it rather than just corporation tax.

This paperwork clearly acknowledges that on the previous year the main company directors accepted paying me in strict accordance with the agreement that they originally made me when I joined the company.

They have recently told me that they were going to dissolve the limited company that had been set up as they didn't want to split the new business from their core business. The main director said he felt I should get something out of this and said he would pay an additional £20k into my bonus pot.

However, when I got the paperwork to sign, it was clearly to transfer my 125 shares over to the other directors and the resignation letter for my directorship clearly stated that I would relinquish all claims against the company for any loss of payment etc etc.

I believe that the way the core business is going, they are reaching a point were they have to separate the two businesses and they are trying to do this without me having a share.

I realise they could just create another company name similar to the one we are currently using but I suspect I would definately have grounds to sue them if they did this?

They only real solid pieces of evidence other than the verbal agreement they made me when I joined the company are the fact that the registered company has me as a director and 125 shares are in my name giving me a 12.5% share in the business. We are currently using the register business name to trade under albeit the accounts are all under the main core company.

I have previous issued paperwork issued by the company accountants which although, not letter headed, was produced by them and I would suspect that they would be loathed to stand up in court and deny it.

I need to know how strong a position would I be in if we couldn't reach an agreement to claim my share of the company profits, to claim costs for my losses associated with not being given my share of the business and for constructive dismissal

If I stand a good chance of winning a claim at least I know I can negotiate quite hard as their solicitors will no doubt tell them that I have a case.