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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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I am a director in a family owned company, there are 4

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I am a director in a family owned company, there are 4 directors, 2 brothers and myself and my father and 2 other shareholders my 2 sisters. I most recently helped the family business sell 2 main assets because we had to, long story. we now have over£1m deposited in bank. Couple months back, had conversation with dad, about future as all family members are at loggerheads, cannot agree anything. He thought it was good idea at time to sell remaining assets, then distribute all proceeds amongst shareholders, allowing us to wind up company. So I put in lot of work to find potential purchaser to buy land, one remaining asset. Out of blue whilst doing this, suddenly changed mind, wanted to invest long term now 5-10 years, for dividend, no chance of selling own shares etc. because of way company has been set up. needed agreement to get investment plan signed off, I stalled, because did not think it was a good plan, Now he has threatened to take legal action against me for loss of income and to have me removed as director. Where do I stand? sorry this is long winded, but is intense
JA: Because laws vary by location, can you tell me where the company is registered?
Customer: england and wales with companies house
JA: Has anything been officially filed? If so, what?
Customer: the investment plan presented by the advisor, and minutes to meeting to say we would look at ways of investing the money
JA: Anything else you want the lawyer to know before I connect you?
Customer: I really want to know, is it best to resign and how can i do this without future legal action taken against me. I don't trust any of the current directors

Good morning. I will assist with your question - be aware this is an email not chat service therefore maybe delayed in replying.

who changed their mind?

and who has threatened legal action?

what is the business please?

Customer: replied 2 months ago.
my father threatened to take action because i will not sign consent form to invest money with this advisor and his mind was changed by my younger brother, also director one of 2 original directors who keeps total control of bank account, I never see bank account, the only way to know anything is when accounts are presented
Customer: replied 2 months ago.
my brother wants capital to remain intact so eventually his kids will inherit the shares when i and my siblings are all dead, hence 10 year plan
Customer: replied 2 months ago.
by the way we don't receive salary, only annual dividend from company
Customer: replied 2 months ago.
when we die shares pass on to family members, so cannot sell shares.
Customer: replied 2 months ago.
the business has assets of a share in motor trader which was sold, land which was sold, still have other land and offices which i was instructed my my father originally, verbally as he does not email or write, because of old age. we now only collect some rent from offices, otherwise no income, just the money sitting in a bank, currently doing nothing
Customer: replied 2 months ago.
I was told by by father to find buyer for remaining land, which is what i was working on until he unexpectantly told me by phone he had changed his mind and now wanted to invest all money with his advisor, so we could continue to get divi for evermore

Thank you for the comprehensive information.

I’m not altogether certain what you want to know about this but you cannot be compelled to continue to stay and if you resign, if you are only remunerated by way of dividends, then you get those shareholder anyway.

I assume that the death provision in respect of the transfer the shares to family members is in the articles of association.

If you want to ask Mrs specific questions, I’m happy to with those for you.

Customer: replied 2 months ago.
but can he sue me for loss of income, if I do not sign, and even if I resign can he still claim loss of income after I have resigned and finally what is the best way to resign, how and what should i do, thanks for your time

Nobody can be made to sign anything in the circumstances and provided you give your contractual notice, no one can be compelled to remain employed either.

How do you resign? A simple straightforward factual letter. You don’t need to give the reasons, it’s just resignation with effect from a particular date and it’s a good idea to confirm when your end date would be.

Before you go (you can come back here at any time as the thread stays open), please do not forget to use the Rating Service because that gives me credit.

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It doesn't just give me a pat on the head!

The thread remains open, and we can still exchange emails.

Kind regards.

FES

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