G
Gerald01
- Original Poster
- #1
Hi, I am currently involved with a new start-up website business that
has been created by myself and another person in the UK. The idea for
the website is hers and as such she wants the majority share of the
company.
When we started working together we initially agreed that I would build and develop the website for this idea on the basis that I would get a % of the business once the business was up and running and that I would be continuing to maintain the website.
Our initial agreement was that I would have 35% of the business and my
partner 65% as it is her idea. Originally I went into the business only to develop the website - but since then I have been involved in much more. I have more or less written the business plan and cash flow analysis, researched for marketing and promotion avenues, promoted the website at events and my partner had wished for me to present the business plan at meetings with investors/banks as she is not good with facts and figures.
We were supposed to be be setting up as a limited company this week - and when we were to sign the documents she would have allocated both of us as Directors and 35% of the business to me and 65% of the business to her. But I have halted proceedings and stopped the majority of the work I was doing on the site as she has told me she is not willing to sign any shareholders agreement or tell me what % I will get when we need an investor - which is going to be in the near future. I would be happy to go along with the company formation knowing that I would have 35-65% pro-rata that would be diluterd this way when we get an investor/s - but she has told me she doesn't want to give up more than 50% of the company herself - and therefore is not willing to dilute the shareholdings pro-rata when it comes to it - which could mean that as there will be no shareholders agreement - she could effectively freeze me out and I could end up with nothing. As she would be the majority shareholder - if I continued on this basis and put in more time consuming work - she could vote to issue more shares when an inestor is incorporated and I could literally end up with an unjust and minimal reward for all my hard work.
I basically have to decide how to proceed from now. She has no funding to pay me for the work I have done at the moment (even though I have suggested she gets a loan to pay me - as she was willing to take a loan to pay for marketing) and I don't want to continue doing anymore work when I don't know what I will be getting for it. I have told her I would like to be paid upfront now for all my work - even though we originally agreed on a % - as she is not willling to confirm my % in any legal agreement. I currently have paid for the domain name and script the website is based on and have all the passwords and maintenance information and have said I will not pass any of these over to her until we come to an agreement.
She has told me she has no finance available to pay me and has basically offered the 2 following options:
1) I become a director of 35% of the company, and continue to work on the website. She is unable to confirm at what % I will receive once investors will become involved and is not willing to sign any share holders agreement. Until the deal is on the table she is unable to state the % I will receive.
2) She will form a company and I will be involved as a shareholder for 35% for a period of time which needs to be discussed. If and when investors join the company my earnings will be 35% pro-rata share of the profits shared between myself, her and the potential investor/s. It will be written up in The Companies House records that I will be a shareholder and we will have a legal agreement drawn up to confirm that after I have received the 35% interest, pro-rata etc. of the profits for a certain amount of time I will relinquish my shares back to the company.
What I need to do is decide on the best way to proceed. If anyone can offer me some advice on the best way to protect my proposed shareholding and what kind of legal agreement I can, if possible get drawn up if I don't proceed to work on the project any longer - but still wish to have a share of the profits/company as a return for the work I have put in it would be appreciated. I don't want to agree to no. 2) above if it could enable her and the investors when we get them to keep the profits for themselves aso that the dividends are minimal and have it so that I don't receive anything for my efforts.
Thanks for the advice in advance.
has been created by myself and another person in the UK. The idea for
the website is hers and as such she wants the majority share of the
company.
When we started working together we initially agreed that I would build and develop the website for this idea on the basis that I would get a % of the business once the business was up and running and that I would be continuing to maintain the website.
Our initial agreement was that I would have 35% of the business and my
partner 65% as it is her idea. Originally I went into the business only to develop the website - but since then I have been involved in much more. I have more or less written the business plan and cash flow analysis, researched for marketing and promotion avenues, promoted the website at events and my partner had wished for me to present the business plan at meetings with investors/banks as she is not good with facts and figures.
We were supposed to be be setting up as a limited company this week - and when we were to sign the documents she would have allocated both of us as Directors and 35% of the business to me and 65% of the business to her. But I have halted proceedings and stopped the majority of the work I was doing on the site as she has told me she is not willing to sign any shareholders agreement or tell me what % I will get when we need an investor - which is going to be in the near future. I would be happy to go along with the company formation knowing that I would have 35-65% pro-rata that would be diluterd this way when we get an investor/s - but she has told me she doesn't want to give up more than 50% of the company herself - and therefore is not willing to dilute the shareholdings pro-rata when it comes to it - which could mean that as there will be no shareholders agreement - she could effectively freeze me out and I could end up with nothing. As she would be the majority shareholder - if I continued on this basis and put in more time consuming work - she could vote to issue more shares when an inestor is incorporated and I could literally end up with an unjust and minimal reward for all my hard work.
I basically have to decide how to proceed from now. She has no funding to pay me for the work I have done at the moment (even though I have suggested she gets a loan to pay me - as she was willing to take a loan to pay for marketing) and I don't want to continue doing anymore work when I don't know what I will be getting for it. I have told her I would like to be paid upfront now for all my work - even though we originally agreed on a % - as she is not willling to confirm my % in any legal agreement. I currently have paid for the domain name and script the website is based on and have all the passwords and maintenance information and have said I will not pass any of these over to her until we come to an agreement.
She has told me she has no finance available to pay me and has basically offered the 2 following options:
1) I become a director of 35% of the company, and continue to work on the website. She is unable to confirm at what % I will receive once investors will become involved and is not willing to sign any share holders agreement. Until the deal is on the table she is unable to state the % I will receive.
2) She will form a company and I will be involved as a shareholder for 35% for a period of time which needs to be discussed. If and when investors join the company my earnings will be 35% pro-rata share of the profits shared between myself, her and the potential investor/s. It will be written up in The Companies House records that I will be a shareholder and we will have a legal agreement drawn up to confirm that after I have received the 35% interest, pro-rata etc. of the profits for a certain amount of time I will relinquish my shares back to the company.
What I need to do is decide on the best way to proceed. If anyone can offer me some advice on the best way to protect my proposed shareholding and what kind of legal agreement I can, if possible get drawn up if I don't proceed to work on the project any longer - but still wish to have a share of the profits/company as a return for the work I have put in it would be appreciated. I don't want to agree to no. 2) above if it could enable her and the investors when we get them to keep the profits for themselves aso that the dividends are minimal and have it so that I don't receive anything for my efforts.
Thanks for the advice in advance.
