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JGM, Solicitor
Category: Law
Satisfied Customers: 12183
Experience:  30 years as a practising solicitor.
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I own a business as a partnership. The other partner has

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I own a business as a partnership. The other partner has invested approximately 20k as have i. They have today stated that they will be signing the business over to me 100% and taking their name off the companies house and also have started taking a loan repayment from the bank without a formal agreement or notice
Customer: replied 1 year ago.
they have another company which they used to pay the initial 20k. I am concerned that they are trying to do something untoward
Customer: replied 1 year ago.
it is a limited company

Thanks for your question. I presume the £20000 each was put in by way of director's loans and that the other party now wishes to resign as a director and have their money returned and give up their shares. Is that broadly the position? Can the company afford the payment? Is there a shareholder's agreement?

Customer: replied 1 year ago.
the company can afford repayments but not at the amount they want right now . They want 650 a month for 36 months however i have not yet seen all of the paperwork proving the actual amounts they invested.
the agreement was verbal, it was to be 50/50 and when it started gaining capital then the loans would be repaid.

Unless there is a shareholders agreement or Articles of Association to the contrary there is no automatic right for a shareholder in a private to be bought out. In addition that that if the company is going to buy back the shares there has to be a special resolution of the company. You should stop any further payments until this is regularised by a formal agreement.

Customer: replied 1 year ago.
Does that then mean that the initial investment down not actually have to be repaid unless a formal agreement is made? I have also just spoke to the accountant and it seems that the figures submitted are wrong and is actually 8k less than they suggest?

Yes that is exactly right. They can just take money out without the company's agreement or some kind of mutual arrangement. That is theft essentially.

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