Resigned Director wants a no claims get out

mikecollins · Mar 13, 2008

My partner has resigned from the company and is now asking for a no claims get out before he will transfer his shareholding to me.

The company is verging on Insolvency, hence his resignation, but I believe I can recover from that situation although it will mean my ploughing money back in.

The company articles state 'should a director die or cease to be a director then he will be deemed to have served Transfer Notices in respect of all shares registered at a value determined by the company Auditors'

Can somebody help here, I am unwilling to provide a no claims get out as I am still looking into various company matters whereby the company may have a claim against him.

Jezclayton · Mar 13, 2008

The very fact that he has asked for a get out suggests he may know something you don't.

The answer is in your own posting. The company auditors need to deal with it and hopefully they will already have a signed transfer form.

Best of luck.

DavidRyves · Mar 13, 2008

I don't think anything you (or the Company) could offer him would protect him from potential personal liabilities going forward under Section 214 of the Insolvency Act if things go belly-up.

If the Company is in dire starights his shareholding is likely to be of negligable value. If you have the cash available to re-construct the Company on an 'honourable' basis - i.e. not dumping on your creditors - there is an honourable, moral and entirely legal way to 'Phoenix' your business (i.e. repair the Blalance Sheet) and remove your Partner without risk - it is a route I have employed in acquiring insolvent companies in the past - no one loses out except the unwanted partner/shareholder and to some extent HMRC (you lose the retained losses but preserve these losses for Corporation Tax purposes) . It does however require some new injection of cash - if, as your post would indicate you do have some available to rescue the situation it would be sensible to apply it in this route rather than putting the money into the existing legal entity.

Please PM me if would be interested in how this can be done.

Best wishes

mikecollins · Mar 14, 2008

Jezclayton said:
The very fact that he has asked for a get out suggests he may know something you don't.

The answer is in your own posting. The company auditors need to deal with it and hopefully they will already have a signed transfer form.

Best of luck.

Thanks for your help and good wishes. Hopefully the Auditors will perform, however the situation is difficult in that they have not received a signed transfer. This isn't surprising as my ex partner tends to stonewall as a control mechanism and he will not want to make things easy. My immediate problem is that although he should transfer the shares in line with the Articles of Association I am not sure how long he can hold off. All this delay causes me concern with my 'rescue plan' and the possibility that even though the shares are worthless today he may wish to negotiate a value based upon my future plans. He has managed to leave me in the proverbial so far and may try it on to make matters worse!

mahutchinson · Mar 17, 2008

Not sure what the shareholding in question represents in percentage terms - it may be irelevant in terms of controlling the company if less than 26%. The articles are rather strange in stating "deemed" as the company needs to receive a stock transfer form signed by the resigned director in order to transfer the shares legally. Otherwise it would require taking him to court to enforce the articles and have his name removed from the register.

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