How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Senior Partner Your Own Question
Senior Partner
Senior Partner, Solicitor
Category: Law
Satisfied Customers: 13329
Experience:  Solicitor with more than 30 years experience
Type Your Law Question Here...
Senior Partner is online now

I own 50% of a gym (ltd company) which is profitable and has

Customer Question

I own 50% of a gym (ltd company) which is profitable and has assets of over £100k. I was meant to be a silent partner and invested £75k and work full time in other employment but have ended up also working for the gym for no pay. My partner is paid a wage to run the gym. Things have got nasty and I feel helpless as I can't leave my job to work there. Most of the takings are in cash which he doesn't show on the books. I now want out either by buying him out, him buying me out or forcing a sale. What are my rights (there was no partnership agreement signed).
Submitted: 4 years ago.
Category: Law
Expert:  Senior Partner replied 4 years ago.
Thanks for your question. Can you give me some more information. I assume from what you say that you each own 50% of the shares in the Company. How was your money put in - as share capital or as loan? Is this documented? Are you both directors and are you the only directors?
Customer: replied 4 years ago.

hi, I do the accounts and we file our returns through an accountant. We are both equal directors and both loaned the company £75k. We have been open for 2.5 years and have paid back £10 k each. My partner takes £500 per week wage (not all declared though). We also pay staff. It turns out he is hardly there but as I earn 80k a year I can't give up work to be there too. It is a good business but we lease the property and own all the equipment.

Expert:  Senior Partner replied 4 years ago.
Ok thanks. that make it quite difficult to resolve disputes in the absence of a shareholders agreement. The fact is that the management of a company is in the hands of its directors. All shareholders can do is appoint and remove directors and if the shareholding is 50/50 then you cannot remove him.

Th only "legal " way of resolving it is to bring a petition to court under s994 of the Companies Act on grounds that the Company is being run in a way that is prejudicial to the shareholders. the court has power to order one shareholder to buy the other out or wind the company up.

You could I suppose call your loan and threaten to wind the company up but it sounds as if a sale would be much better,

If a sensible dialogue is not possible then you should set out a in writing a proposal to buy him out or sell to him and follow that up with a solicitors letter if he does not respond sensibly.

I am afraid it is extremely difficult to resolve 50/50 ventures in the absence of clear documentation.

Customer: replied 4 years ago.

I have considered making my brother my agent or giving my half to him so that all wages/income can be split 50/50 - is this an option? Can he object to that? He has employed his girlfriend without consulting me but she is just an employee.

Expert:  Senior Partner replied 4 years ago.
There is no reason why you cannot share it with your brother but shareholdings are not really relevant . Shareholders have no rights in management it is only directors who do. It would be better if you could get someone into the business so if there is a real bust up perhaps he can assume control because in these circumstances it is the person who has the keys and control of the bank etc that is really in charge
Customer: replied 4 years ago.

thanks - I am a co director so I could do that. I have control of the bank but unfortunately he has the keys and we take mostly cash. Last question - how can I force him to bank most of the cash. This is difficult because he doesn't really have to account for the takings in terms of sunbed use and gym sessions.

Customer: replied 4 years ago.

sorry - also, if we can't agree to sell to me or him can I force a sale on the market?

Expert:  Senior Partner replied 4 years ago.
Banking the money is a practical issue. I would be concerned if he is taking cash not only because it is theft from the company but you could be in trouble with HMRC if found out. They know perfectly well that a lot of cash based businesses try to syphon off earnings and are not above checking. Presumably you operate till which ought ot record the takings? If as you suggest he is not there a lot f the time presumably if you have someone like your brother inside he can monitor what is going on.

You cannot force a sale in the absence of a shareholders agreement unless you go to court. - or you foreclose on the loan an d appoint a liquidate to sell the business - not necessarily a good idea. if the only assets are a lease and some equipment. If you can find a purchaser you might find he is willing to sell