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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 am a 50% shareholder. The other 50% shareholder is the sole

Customer Question

I am a 50% shareholder. The other 50% shareholder is the sole director. I have serious concerns regarding the accounts due to excessive loans to the director, who will not speak to me about this. Can I apply to the courts to ask for an independent audit to be carried out on the company accounts, paid for by the company? Would this be as simple as going to the local county court? I was hoping that if I can prove a reason, that as shareholder I can't demand for such an audit. I am aware of the expense.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi thank you for your question and welcome. My name is ***** ***** I will assist you. I am a company law expert. Do you have a shareholders agreement? Have you ever previously approved a loan to the director? Kind regards ***** ***** I will be online periodically tonight so please do not be concerned if you do not hear from me until the morning - I will be working on a response.
Customer: replied 2 years ago.

No shareholder agreement and there has been no approval for a loan in writing or verbally by me.

The company is a regulated FCA company. I believe that due to the FCA liquidity adequacy rules for businesses, and being that the company has no liquidity as he keeps taking the money out, that he has mastered loans from the compnay to himself, which on paper shows as If the compnay has liquidity via loan assets. He won't let me speak to the accountant, or speak to me about this, which is why I as asking if I can demand for an independanteltly audit

Expert:  Alex J. replied 2 years ago.
Hi, Thank you. There is no direct way of demanding an independent audit. What you can do is link his conduct to various offences under the Companies Act 2006 (s.172-179) - duty not to act in conflict of interest, duty to use independent judgment, duty to act in the best interests of the company etc. You could potentially sue him for breaches of these sections and demand financial information of the company on disclosure (S.260 - it is called a derivative action). Going forward do you want to leave this arrangement and break your tie to him?