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JGM, Solicitor
Category: Law
Satisfied Customers: 12199
Experience:  30 years as a practising solicitor.
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I am a director of a limited company, to which I own 50% of

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I am a director of a limited company, to which I own 50% of the 100 shares. To gain these 50% shares I payed into a loan account £25,000 at the same time as my business partner who also payed in £25,000.
I recently looked into the company bank account to find out that my business partner has taken £50,000+ more than I have over the 10 month period of which I have owned the 50% shares. I have made copies of credit card and bank statements and highlighted all transactions where he has taken extra money, not to the companies benefit. Although this does include things like West Ham United FC to which he will try and claim that it's client entertainment. But as the sales director I am 100% certain that no client or perspective new clients have been to such events. Other benefits to himself include; family utility bills, paying money into personal investments, a loan that I am totally unaware of, his wife takes a wage from the company yet doesn't work here, and many more to which I have highlighted.
The reason to my suspicions is that I recently discovered that I wasn't a signatory on the companies bank account, although he had assured me on more than one occasion I was. It was only because he has always dealt with paying in the cheques and general banking of the company that I had no reason to disbelieve him. Now that I am on the accounts, I have discovered all of the above topic.
What would you suggest the best course of action would be now?
Thank you for your question.
What has happened here isn't uncommon. The other director has overdrawn his directors loan account and now essentially owes the company money. He has to be asked to repay the money or otherwise balance the books, perhaps by relinquishing shares or whatever other method may be agreed.
Going forward there should also be a formal shareholders agreement drawn up regulating what each director is entitled to by way of remuneration and benefits so that this can't happen again.
If there is no agreement on this between the shareholders then in theory the company could sue the director for the money taken that was not authorised. However, that isn't practical where there is just the two of you so you either have to agree something or part company.
Happy to discuss further.
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