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Category: Law
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Hi i currently own a limited company 100% of the shares. my

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Hi i currently own a limited company 100% of the shares. my friend initially gave me 10% of the funds because i wanted him in with me on my business as we are friends. Even though this money was actually a lot less than 10% Well all agreed to do our part in getting the business successful Now that the business is getting going his family have become involved and have demanded he ask for 50% of the business. His wife and family are getting so involved it is really starting to damaged the relationship. They are also demanding an amount salary for the work he does thats is just not in the interest in the business. we both do our share in the work and up until now we have both been working for no salary. im made him a very reasonable offer of a wage what is equal to the current full time job he is doing and he flatly refused saying his wife will never have this because he has told her how much money the will get and be able to buy everything they want. I no longer want him involved in the business as he only seems to care what he can take from the business and to me thins is not in the interest of the business. please can anyone let me know where i stand as the only share holder in the company and the director.

I forgot to add that it was just a verbal agreement the 10%

Submitted: 4 years ago.
Category: Law
Expert:  James Mather replied 4 years ago.

Thank you for your question here on Just answer. It is my pleasure to try and assist you with this today. Please bear with me if I need to ask for any further information from you in order for me to be able to advise you fully. My name is Law Denning and I am a practising solicitor. I have been an expert on this website in UK law since 2008. During that time, as you appreciate, I have answered thousands of questions from satisfied users on a variety of subjects.
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You say that he gave you 10% of the funds to start the business but then you say that he gave you a lot less than 10%. Please explain. Why did you not give him 10% of the business at outset?
what work was it agreed that each of you would do? What has his family to do with this? Are they simply interfering?
When did the business start?
Why don’t you simply give him is 10% back?
Customer: replied 4 years ago.

Sorry for the confusion. I told him if he gave me £1500 he can have 10%.

But in fact it was actually less than 10% of the funds i put into it. around £17000. But him being a good friend i didn't mind.

The reason i delayed him actually becoming a shareholder was because he gave me the money bit by bit and making up excuses.

I know i was very foolish for allowing this.

I would work on a stall in a shopping centre and he would try to set up the website. the stall done terrible but in fact saved the life of the business as he admitted to me when i closed it he felt bad because he had basically done nothing to help as the website had only took £240 in them 6 months .the stall i worked on actually took £6000 and enabled us to change our product and become successful because the website really started to pick up once he started doing some work.

He believes i made the business fail and he made it work.

The problem with his family getting involved is he is discussing the business with them and not with me. allowing them to see the websites turnover and profits. The business started 31/08/2012. we actually spoke to the accountant a few weeks ago about putting him down as a shareholder and both agreed we both start to get the same basic salary of £650 a month.

Now he isnt happy and at first said he wants a bigger share, after i refused he said he wanted a salary that as far as i am concerned would completely drain the business of everything . the salary added up to £3400 a month.

I want to offer him a fair amount because i do appreciate the work he has done lately. i want to offer him £5000 and im on my own. I have contacted you first before i make him any offer to find out if he refuses could he sue me.



Expert:  James Mather replied 4 years ago.
Thank you.
So why didn’t you give him 10% in exchange for the £1500 as you promised? Ignore the fact that £1500 may have been less than 10%. Ignore the fact that it came in dribs and drabs.
Assuming that you were to employ him, how much would the effort that he has put in, amount to in terms of wages?
Remember I am got a clue what the business is so I don’t know what the reference to a stall in the shopping centre refers to. It would help if I had the full background in detail please
Customer: replied 4 years ago.

it was a verbal agreement that i would give him 10% and i fully intended to a few weeks ago when i said to the accountant to contact companies house and add him as a 10% shareholder. previous to this i was trying to sort out tax and stock and . i fully intended add him as a shareholder but because of my inexperience with running a limited company. it was quite unorganized so i booked the appointment with the accountant to actually add him .because previous to this we didnt even have an accountant.

But considering the abuse i got in text messages and a phone call being blamed for not offering 50% because his wife told him he deserves 50% and then if not a higher percentage demanding £3400 a month salary.

The stall in the shopping centre and website were both selling electronic cigarettes. all part of the same business. the initial agreement was i work on the stall and he works on the site. this didn't happen. i worked on the stalled every day and he done virtually nothing from the start of the business until March. i closed the stall in February feeling all of my motivation had gone because i was clawing back any money we had spent all i had left was just over £3000 because half of the takings from the stall went on rent. the site had taken £240 in 6 months. i got a phone call saying from him admitting he feels bad that he has done nothing.

i was angry but eventually let it go.

He then started to help and i risked the final £3000 all we had left into more stock i believed would be the correct choice. the site was extremely slow but has now picked up. now its turning over a large amount each month his wife and mother in law have told him he deserves 50%.i said no. and got a lot of abuse. I said to him how about a bonus of 40p every parcel on top of the basic wage. which gives a salary average total of £1300 a month . he flatly refused saying his wife she it has to be more.

I feel his family involvement will lead to far more interference and demands the more successful the business becomes.

Really all i want to know is do i have a contract with him ? in a court of law can he demand his 10% because i dont want him part of this business

i am willing to pay him.


Expert:  James Mather replied 4 years ago.
The fact remains that you agreed to give him 10% and you have not. The reason is irrelevant.
A verbal agreement is quite enforceable if the terms are not in dispute which it appears that they are not because you say that you agreed to give him 10%.
His wife can tell him that he deserves what he likes in which case, he should go into business with his wife! At this stage, he is entitled to 10% and that is it.
In the absence of any agreement to the contrary, he is entitled to an amount of money which varies between nothing and the going rate for an assistant. You can argue that he is entitled to nothing because nothing was agreed that I think the church is more likely (if it went to court) toward that he gets paid something on a quantum meruit basis. Quantum meruit basically means that he gets paid for the amount of work that he did.
You could argue that the intention was to give him 10% but that was in payment for £1500. The judge therefore is likely to think that no one will work for nothing and he was either doing it on the basis that he would get paid all he was doing it on the basis that he would eventually own a bigger part of the business.
Your counterargument was that you worked there as well and you put all the money in. It really depends on whether you want an argument in court with him or not.
What I would be inclined to do would be to give him the 10% that it is already excepted he is entitled to.
If you agreed that you would give him £1300 per month, then regardless of what his interfering wife says, he is entitled to £1300 a month. If you did not agree £1300 a month and he has turned that down because his wife thinks that he is entitled to more, then I would argue that is not entitled to anything. You do appear however two of agreed to pay him a basic wage and he is entitled to that.
To answer your question at the very end. Yes you do have a contract with him. In court could he demand his 10% yes.
If the business is going to be successful, my suggestion would be to pay him off and amount of money to get rid of him. How much that is really comes down to how much you want to pay but certainly, he is entitled to his £1500 and an amount of money in all probability because of the amount of work that he did presumably, anticipating getting a bigger chunk of the business.
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Customer: replied 4 years ago.

one more question. when you say if the business is successful pay him off and get rid of him. Do you mean totally rid of him even as a shareholder or just and employee? Thank you

Expert:  James Mather replied 4 years ago.

You can only get rid of him as a shareholder, if he agrees to be bought out. In that respect, you are going to be better buying him off now rather than when the company is making a lot of money
Expert:  Nicola-mod replied 4 years ago.

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