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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3843
Experience:  Solicitors 2 years plus PQE
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Can I get some advice regarding a ltd company?

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Hi, can I get some advice regarding a ltd company?
Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today. Can you please explain what advice you require in more detail?
Customer: replied 2 years ago.
Hi Ben, 3 of us set up a ltd taxi company recently. Unfortunately 1 of the directors has not pulled his weight on setting the business up which is due to launch within the next month. The other 2 directors have been working full time and spent many hours on preparing the company for launch. My fellow director Nick is the brains behind the new business and is responsible for most of the set up as he is the creative director with experience within the industry. Jon the absent party helped us at the start to source the business premises and supplied a couple of computers. Since then Nick and myself have implemented the infrastructure, recruited staff added funds to the business and paid for all the companies assets totalling £17,000 and an additional £34,5000 in finance. Nick is responsible for financing the cars we have acquired and I have put in the money to get us to where we are today. Jon as part of the deal was supposed to buy a car which he went out and bought for £8,800 and then refused to give it to the company as an asset stating it could only be used by him and not owned by the company. This and the fact he wouldn't put any work in to setting up the infrastructure was capped by him refusing to work full time when the company launches has led us to wanting to sack him. He had previously agreed to work full time and that his other business would not get in the way of the new venture. At this point we have realised that not only will he not put the hours in to make the company work he will actually be detrimental to the business through lack of trust and resentment that his laziness has caused. We have just found at that our phone number (01933 400400) which we asked him to order was done by him through his other business and not through our ltd company. He realises that he has to leave the company and has admitted now that he was looking for a way to earn money without putting in the effort needed and is happy to walk away. He is demanding 5% shares of the business to go which we think is unfair as no effort or no money was ever put in. He did pay a few set up bills at the start, ie phone lines, 1st months rent and £200 deposit for web design. The company was registered by him at his accountants address. I have written to companies house asking to change the address to our trading address and also filled and sent the form in to remove him from the directorship. His initial shareholding I assume would be a third of the business. Can we change the phone number and accounts and carry on without him or can he demand shares which he has not contributed anything to.
ok thank for clarifying - I will need to refer this to a colleague of mine who is a company lawyer and he will be better placed to assist. No need to reply in the meantime, thanks
Hi, Thank you for your question and welcome. My name is ***** ***** my colleague has asked me to assist you. Who currently actually owns all the shares? Was he ever actually issued with any shares?
Customer: replied 2 years ago.
No not really, he just registered us all as directors at company house.
Hi, Thank you. When the company is formed it will have to have been formed with at least one subscriber, will the accountant confirm who the company has issued shares to? Being a director is completely separate from being a shareholder - it is not assumed by Companies House that three directors means you have a third of the shares each. Also how have you been putting money into the company? Was it as a loan?
Customer: replied 2 years ago.
Jon set up a sole trader Simply Cabs account to start us off, we are (were) in the throws of setting up a ltd account through Barclays for all 3 directors which has not been completed or set up due to me trying to resolve a CCJ before they will go ahead. I have been transferring money into the sole trader account as and when needed to pay invoices and for goods and services. After telling Jon we would not be going ahead with him he transferred the £1800 back to my personal account. We are now trying to set up a new Ltd account for Simply Cabs with another bank. As regarding share allocations I have no correspondence other than an agreement between the 3 of us to have an allocation of 33.3% shares which was distributed by Jon but never signed by anyone.
Customer: replied 2 years ago.
Just pulled this from a website if it helps.Incorporated
##4 December 2015 (4 Months Old)People
##3 active directors & 0 active secretaries View All People >
##Mr Ian Wiggins, Mr Nick Finn & Mr Jonathan Michael O'BrienAnnual Returns
##Next annual return made up to 4 December 2016 due by 1 January 2017Accounts
##Next accounts made up to 31 December 2016 due by 4 September 2017• No previous accountsShareholder
##2 shareholders View All Shareholders >
##Mr Nick Finn & Mr Jonathan Michael O'brienGroup structure
##No parent company or subsidiaires reportedClassification
To be provided on next annual return.
Customer: replied 2 years ago.
Going back to your last question the accountant who set up the company is Jon's accountant who only Jon has an established relationship with so cannot contact for information.
Customer: replied 2 years ago.
Latest Activity
FOLLOWNew Director Ian Wiggins Appointed
2 months ago 26 Jan 2016Company Incorporated
4 months ago 4 Dec 2015New Director Nick Finn Appointed
4 months ago 4 Dec 2015New Director Jonathan Michael O'Brien Appointed
4 months ago 4 Dec 2015
Hi, Thank you. If no further shares have been issued there are only two shareholders it appears - Nick and Jon. Has the old company actually signed any finance documents or accepted any liability? Will the finance companies be prepared to transfer finance to your new company? Have you personally guaranteed any documents or finance?
Customer: replied 2 years ago.
All finance documents are in the name of Nick Finn or myself with a view to setting up the direct debit instructions through the new bank account when it is set up.
Customer: replied 2 years ago.
No liability is with the company as yet.
Hi, Thank you. From what you have told me, other than a name, there is nothing actually of any value or substance in the existing company? If you set up all the finance documents in your own names, you would be better of just forming a fresh company without these issues. This individual has no right to the new company especially if none of you signed the original document detailing everyones consent. You may to replicate some of the set work you have already done, but this would be far better than giving someone five percent of your business? You could easily resign as a director today and then you would be free to start the new company. Do you need anything from old co?
Customer: replied 2 years ago.
Nick and I have trademarked the logo and name in our own names, by starting another company would we have to change the company name?
Hi, Thank you. Potentially you would have to use a different company name but if you owned the registered trade mark, you could stop the other company from trading in that same name. For example if old co is called XYZ Limited - you could form ABC Limited trading as XYZ - as you have the trade mark XYZ you tell XYZ not to use the name for the provision of a similar business. If you want to break away from old co, you need to stop working for it and resign as a director as soon as possible, prior to doing so make sure you have control of all the assets that belong to you.
Customer: replied 2 years ago.
This sounds like our best option, thank you Alex. We have bought things for the company through Simply Cabs Ltd that have been paid for by myself and invoiced to the company. If we change name could Jon have any claim on these goods, ie computers, software, monitors, etc
Customer: replied 2 years ago.
'The Simply Cabs Company Ltd' trading as Simply Cabs is starting to appeal to me Alex!!!
Customer: replied 2 years ago.
Did I do the wrong thing by asking companies house to take Jon off the directorship if we also are about to resign?
Hi, Thank you. The problem is Jon is a shareholder from the info you have provided - he appears to control 50% of the company. When you paid for these items - how did you put the money into the company? Was it a loan?
Customer: replied 2 years ago.
I transferred initially £5000 into the Simply Cabs account to fund the purchases of equipment. I have agreed to invest £20,000 into the company in order to be a director and equal shareholder. Since the £5000 was invested I have subsequently put in an additional £12,000 from my account into the business.
Customer: replied 2 years ago.
There are currently no funds left in the account as Jon transferred the remaining £1800 back to me.
Hi, Thank you. ***** does not know you intend to form a new company, why dont you suggest leaving and taking the equipment as repayment of your loan?
Customer: replied 2 years ago.
I'm online trying to register 'The Simply Cabs Company Ltd' but comes up with a similar company i.e. Simply Cabs already exists. Do we need to register something totally different?Do Nick and myself have the authority to close Simply Cabs Ltd without Jon?
Customer: replied 2 years ago.
As stated earlier I have already applied to companies house to remove Jon from the directorship and change the registered address away from his accountants!
Customer: replied 2 years ago.
Just had a sickening thought, im pretty sure I instructed Jon to register the domain name, just trying to find out now who he registered it too!!!
Hi Thank you. (i) The trade mark and company name are seperate - if you have the trade mark you can use this as your trading style, the underlying company name can be anything as long as it says somewhere in the small print that the Trade Mark is a trading style of your registered company;(ii) You cannot close the company down without Jon's consent - before you can do anything with Old co you need to clarify exactly who the shareholders are- this may involve face to face negotiation with Jon.(iii) I would not make any more changes until you agree with Jon how you close the company down - if he is a 50% shareholder you do not want to risk having a dispute with him and him claiming the company assets - what you need to do is explain that you are going your separate ways, you are a creditor of the company having loaned it money and therefore need to be repaid (either in cash or by taking the equipment and liquidating the company).(iv) If he took the domain name you can always challange this using the ICAAN service​
Customer: replied 2 years ago.
I'm really worried now as just found out Jon registered our domain name to himself. Can he take our site offline whilst we challenge with ICAAN
Hi, Thank you. Potentially if he owns the domain name yes - but you have the registered Trade Mark so I would expect any dispute to be dealt with quickly. If he is still open to negotiate you have an opportunity to resolve things amicably. If you did not want the hassle of forming a new company or raising a dispute, as an alternative why don't you try offering him less than 5% to sign over an assignment of all the assets you want to a company of your choice? - You could always then dilute his shareholding at a later date? You could prepare the assignment documents yourself through a solicitor, take them to a last face to face meeting and get him to sign over everything you want without further delay?
Customer: replied 2 years ago.
I think this would raise alarm bells that we are just trying to remove him from everything. If we agree to give him 5% and I get him to pass over ownership of the domain name to the company can I then at a later stage close the company and transfer assets to the new company?
Customer: replied 2 years ago.
If he was a £5% share holder and Nick and myself owned the remaining 95% would he be able to stop us?
Hi, Thank you. What you are suggesting is potentially possible yes - but it would likely cost you money in professional fees - what you would need to do is, as part of the settlement deal, agree that you are a creditor of the company (for the money you have injected), and you should be given a debenture over the assets as security for your debt. At a later date you would then be able to consider putting the company into administration and flipping the assets into a new company. This would likely be received very badly (by him) and you would have to be professionally advised by an accountant, but it would be potentially a solution. The other point is if you own 95% of the company you effectively have power to issue more shares (by way of capital injection) and dilute him. Before doing any of these acts, you need to ensure the assets are secure and out his control and that you can reach a settlement. Both these scenarios should be last resorts, so once you have reached a settlement with him I would consider seeing if in the future you can remove him from the company by agreement?
Customer: replied 2 years ago.
Ok, so if agreement is made between all parties that the assets of the company are owned by myself will I then be able to transfer my assets to the new business at a later stage?
Hi, Thank you. If you own the assets personally then yes you can transfer them to a limited company whenever you wish. Would he be prepared to transfer the assets to you?
Customer: replied 2 years ago.
I think there's a good chance, it is after all only furniture, a couple of pc's and a few monitors. Our biggest issues are the domain name and phone number.
Hi, Thank you. Again if you own the Trade Mark, you can always challange the domain name at a later date. Is the business currently trading? Who paid for the website development?
Customer: replied 2 years ago.
We are not trading as yet, Jon paid the initial £200 to the website designer, the rest to be paid on completion by Simply Cabs. Due to be finished in 2/3 weeks.
Hi, Thank you. If you are not trading yet, and he refuses to give the domain name, could you not register it with a different suffix until any dispute is resolve, that way you will at least have a place of business?
Customer: replied 2 years ago.
Our brand cannot be compromised. We are called 'Simply Cabs' and our domain name is ', the is already taken and as a national franchise nothing but the .com will do!
Customer: replied 2 years ago.
Surely if he signs over the domain name to Simply Cabs Ltd and walks away with 5% of shares we can just transfer the domain name to the new company when we are ready to change?
Hi, Thank you. Unfortunately you three options in this regard (i) You negotiate with him and reach a settlement (likely be the fastest route (ii) Complain to ICAAN or (iii) Sue him for the return of the domain name (this option may be difficult because you have a wider dispute over forming the business). If I were in your position, and I was owed money by the company concerned, I would do everything in my power to get the relevant assets into that company and then get security for my debt - in the grand scheme of things his 5% may not actually be worth that much if you take steps to either dilute him or transfer the company assets at a later date if your loan is never repaid. Kind regards AJ
Customer: replied 2 years ago.
If it wasn't for him owning the domain name I would be happy to change the company over today.
Hi, Thank you. Does he actually want to use the domain name going forward?
Customer: replied 2 years ago.
No, he has no use for it other than leverage against us in his bid to walk away with a deal that involves shares. At this point i'm pretty sure he hasn't even realised that he has the domain name as a bargaining tool.If he gives phone number and domain to simply cabs and accepts 5% shares can Nick and myself then set up the agreement that the companies assets are to be owned by myself against the debt?
Customer: replied 2 years ago.
He is waiting for an offer from Nick and myself which he will accept as long as he gets a % of the company, first he stated 15%, then 10% and now today 5%. From our discussions I feel the offer should be 5% shares of the business if he hands over the phone number, domain name and keys. I will then put in place an agreement with Nick that the company assets are owned by myself against my investment. Then ata later stage this can be transferred to the new company.
Hi, Thank you. If he has no use for the domain name, then you say the company owes you money and you should be transferred ownership of the assets and domain name in repayment of the debt. If you owned the assets you would be free to allocated them where ever you wished. Kind regards AJ
Customer: replied 2 years ago.
Thank you Alex, I will put him over a proposal later giving him his 5% in exchange for domain name and number be transferred from himself to the business. Thank you again, you have been great. Can we contact you again if any further development arises?
Hi, Thank you. If you would like to talk through anything yes please do not hesitate to contact me on this thread. If you would rate my answer in the mean time I would be most grateful. I wish you the best of luck. Kind regards AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3843
Experience: Solicitors 2 years plus PQE
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Customer: replied 2 years ago.
Hi Alex,This is the offer we have recieved from Jon.Directors Agreements
Simply Cabs Ltd
Currently three directors share the company Simply Cabs Ltd
Each Director holding a third share.
Ian Wiggins
Nick Fin
Jon O’Brien
Upon agreement Mr O’Brien agrees to give back his equal percentage of the
company to hold a 5% share and become a sleeping Director.
All aspects of the company will be run and controlled by the majority
shareholders. Mr O’Brien remains a director listed at Companies House.
Mr O’Brien will not be responsible for any debt accrued by the company. If the
company were to fail Mr O’Brien would not be liable for any outstanding monies
owed to any party.
Giving reasonable notice Mr O’Brien will be at liberty to have all book keeping
records checked by an independent authorised and accredited agent.
A 5% return on all profits will be paid to Mr O’Brien on a six monthly basis; at
this time Mr O’Brien’s chosen agent will be at liberty to check all bank records
and transactions.
Mr O’Brien agrees to hand over ownership for anything the company needs to
conduct its day to day business including equipment, telephone numbers and
any intellectual property for as long as this agreement is in place.
Other than that Mr O’Brien wishes the two directors well
Hi, Thank you. has he guaranteed that he will formally assign all company assets to the company? Also the 5% profit surely can only be payable if the company declares a dividend?
Customer: replied 2 years ago.
Yes, do you think this offer is acceptable based on the fact we will be assigning all assets to myself once he has signed everything over and setting up new company..
Hi, The offer has some potential. Bare in mind he is tying all the obligations to the company and giving you all the assets. Assume the company then just stopped trading who would he sue? The company - which would have no assets. Who has to prepare all the paper work? Kind regards AJ
Customer: replied 2 years ago.
Jon has emailed this offer to us this morning, so i assume he's created this document himself for us all to sign.
Hi, Thank you. Has he made clear that he will assign all assets to you personally (including completing all necessary formalities)? Kind regards AJ
Customer: replied 2 years ago.
Hi, Ok so to make this document legally binding shall we all sign it and get an independent witness to sign as well to verify that we have all signed and agreed to it?
Hi, Thank you. You need something more formal than that you need:- Board minutes confirming his resignation as a director and your appointment;- Shareholder resolution approving the issue of shares to you and the other business partner;- A stock transfer form so that he sells all but 5% of his shares to you and the other business partner;- A shareholders agreement - to detail when dividends will be distributed;- An assignment of the company assets from him to you personally - including any relevant website registrations and disclosure of any passwords and account details.Also I would want some guarantee he will not set up a competing business while he is a shareholder - especially if he has access to the company books.Kind regardsAJ
Customer: replied 2 years ago.
OK, Thankyou very much for all your help. I will put all this in place..