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Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Is it legal UK Ltd company to misrepresent the company

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Is it legal for a UK Ltd company to misrepresent the company value (£5 million rather than the more realistic £500K) and the stated returns on investment (over 2 times in 12 months stated as fact) when attempting to sell shares privately to procure investment?
[also no warning provided regarding potential loss of entire investment].
Hello my name is ***** ***** I will help you with this.
-Could you explain your situation a little more?
Customer: replied 2 years ago.

Hi Alex,

further details are:

  • The client company is a London based Ltd. company, we are an independent web development contractor (partnership not Ltd).

  • We have neither signed any share agreements or been allocated any shares to date.

  • The deal was a split cash retainer/equity deal, with the bulk of the work done for equity.

  • We don't qualify as sophisticated investors, and don't believe we could ever reasonably be assumed to do so - it wasn't mentioned at the time.

  • The cash value of the equity amount due is ~£90K

  • Deal arranged in July 2012

Claims/Statements made at that time:

  • Client company valued at £5 million - recent information suggests that around £400K to £600K is more realistic.

  • We would receive shares at 7.5p each (1p nominal value).

  • In 6 months shares would be worth 13p per share.

  • In 12 months 20p per share (this and above stated, not couched as a possibility).

  • Client company would be sold in 3 years (which would be this month - 2015) with hoped for share value of £7.50 to £15 per share, or 10 to 20 times our investment.

There was never any suggestion or stated warning that there was any risk to us of not receiving at least 1 to 1 value for our time and effort invested (the amount represents about 18 months turnover for us, so we would have refused outright if we hadn't been assured that payment would be forthcoming. Only the final sale value was portrayed as being speculative, not that there wouldn't be at least some positive interest on our delaying payment.

About 20% of the work commissioned has been paid for in cash. There is about £15K + VAT still due for cash invoices.

Many Thanks,


You are owed about £15k in losses, is that right?
Customer: replied 2 years ago.

In total we have £86500+VAT of work unpaid. ~£15K of this was due to be paid in cash and the rest company equity.

We feel, however, that as the information that persuaded us to agree to equity payment was provably false, we should pursue cash payment for the full amount. I.e. we are owed the full value of the work we did, not just the cash proportion.

(To complicate matters we strongly suspect the company is now trading while insolvent, meaning the shares would probably be worthless if we accepted them).

Ok, is this a Ltd company?
Customer: replied 2 years ago.

Yes, a UK Ltd company.

You need to write and set out your losses and request a payment/compensation within 14 days or say you will go to Court within 14 days. You should make sure you send this signed delivery and keep a copy.
If they do not pay/compensate you then you can issue proceedings in the County Court. You can either do this online at: or by completing form N1 and take it to your local County Court.
The Court will then issue a claim which a copy will be sent to the Defendant who will have a limited time to defend it, if not you can enter Judgment and enforce.
If the claim is for £10,000 or less it will be a small claim so you will not need legal representation. Over this value you would need representation for trial. As its over £10,000 if hey contest it then you would need a lawyer to represent you at trial as it would be specialist proceedings.
Can I clarify anything for you about this today please?
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