Toggle sidebar

Dispute with business partner

Sort by date Sort by votes
I

interwebs7

Free Member
Aug 10, 2012
28
0
Hi all,

I am at the end of my tether with this. I have also sought advice from local lawyers, but seems they are wanting £800+ when really all I want is some advice on what I can do next. If I need a solicitor, then I may be happy to pay the £800, but until I know what the options are then I'm quite reluctant to i'm sure you can understand.

Anyway, I hope someone here can help.

I have an online business 50/50 with an old colleague. Over the years and especially in the last year I have taken on more and more of his responsibilities as they weren't getting done. I tried to renegotiate the responsibilities last year, but soon enough his share weren't getting done again. He works full time, whereas I quit work some years ago to concentrate on other ventures as well as this business. I accept his time is limited, but things still have to be fair.

So, a couple of months ago I raised my concerns and suggested the possibility of selling my share, or the whole business. Turns out he doesn't want to sell, or buy me out - why would he - he gets money for nothing!

What he did suggest however was for his girlfriend to take on his responsibilities and I work with her. Accepting that this might be my only option, I revisited the responsibilities and split them as best I could between the two of us. The only task I couldn't take on was any software development required (which I would normally undertake) as it was too time consuming to do in addition to my new responsibilities. So I suggested we either outsource it, or I get paid my usual hourly rate by the company for it. There isn't constant development required, but in my opinion it does need a completely new platform if we are to move forwards, grow and keep up with the competition.

Anyway, things have gone quiet again. The only feedback I got, was from his girlfriend asking whether any further development was actually required. My opinion is that if that's the attitude then i'm fighting a losing battle anyway.

So here I am, wondering what I can do next. We haven't agreed the latest responsibilities, because I'm getting no reply to emails, and so we're back to square one.

I have other ventures which I want to progress with, but can't as they may be deemed to be in direct competition with this business. I'm not willing to do them under this business as it wouldn't be worth it for half the profit.

So, what can I do? It's got to the stage now that this is actually restricting my own personal development. I'd love to move things forward in the current business, but i can't even get an agreement on responsibilities, never mind ongoing strategy. This is such a wasted opportunity. Surely there must be something I can do if I can at least prove incompetence? Even if there's not - am I expected to just continue doing 75% of the work for half the money - forever?!

I should mention that we didn't sign any specific responsibilities agreement when we set the company up.

Sorry for the long message, but appreciate any help.
 
Hi,

You could suggest paying yourself a small salary to compensate for the extra work you do?
 
Upvote 0
Jonathan Black said:
Hi,

You could suggest paying yourself a small salary to compensate for the extra work you do?
Click to expand...

Hi, thanks, well that's kind of what I've done suggesting I get paid by the hour for any development work required. The problem is I get little/no feedback or agreement to anything I propose.
 
Upvote 0
If you always pick up the slack, there is no incentive for him to pick up the work. He knows that you'll eventually cave.

You could outsource all the work, with a reduced profit of course. Less money in his pocket might motivate him to contribute - but you'll suffer too.

You keep saying that you don't receive a reply to emails. Why continue to email him? Pick up the phone, or go and see him.
 
  • Like
Reactions: ethical PR
Upvote 0
What does your shareholder agreement say on this?

Why don't you buy him out or you sell your shares?
 
Upvote 0
The Accountancy Lab said:
You keep saying that you don't receive a reply to emails. Why continue to email him? Pick up the phone, or go and see him.
Click to expand...

Or if visiting or phoning is out of the question try emailing him on the basis of making your suggestion and stating that "unless I hear from you to the contrary by xxxxx I will assume that you are in agreement and will go ahead and..... etc etc
 
Upvote 0
I think a couple of hundred quid for a consultation with a lawyer is your best way forward. We can offer opinions but you need to know where you stand legally. With no agreement theres lots of things you can do but you dont want them to come back and bite you later. eg Who holds the purse strings? are you able to start paying yourself extra?

Sounds a shame as It sounds like the sort of partnership that I am looking for and sounds like it has potential but this is putting me off partnerships. Seen too many similar posts.
 
Last edited:
Upvote 0
Partnerships need to be worked at. Your partner has not worked to insure that the partnership stays healthy, but it could be argued that you have not done much to keep it healthy either. Moving full time without your partner doing the same, means that unless the partnership agreement was changed to take this into account you were always going put the health of the partnership at risk.

I know partnerships where both partners work full time in the partnership with no outside jobs, they agree to change their company cars at the same time and get exactly the same model/year colour. They have personal cars which they agree to change at the time again to the same model/year and colour. They even agree to only make an extension to their respective houses at the same time and roughly of the same value. They work at their partnership and it is successful in a sector where partnerships rarely work.

See a solicitor and get it sorted out. Better late than never.
 
Last edited:
  • Like
Reactions: interwebs7
Upvote 0
The Accountancy Lab said:
You keep saying that you don't receive a reply to emails. Why continue to email him? Pick up the phone, or go and see him.
Click to expand...

Well mostly because I would prefer to have such discussions/agreements in writing, but yes you are right, face-to-face contact should be the next course of action. That being said, I suspect we'll be in the same position even after then. I've tried time and time again to get things sorted, but it either falls on deaf ears, or things soon slip back into their old ways...
 
Upvote 0
consultant said:
What does your shareholder agreement say on this?
Click to expand...
As mentioned, we had no specific responsibilities agreement in place when we set up the company. Something I have learnt never to do again.

consultant said:
Why don't you buy him out or you sell your shares?
Click to expand...

Again, as mentioned, he won't sell or buy me out, as currently he gets residual income each month for doing very little. Why change that?!

It would also be very difficult to sell my share to someone else if they knew their new partner didn't do much...
 
Upvote 0
Ian J said:
Or if visiting or phoning is out of the question try emailing him on the basis of making your suggestion and stating that "unless I hear from you to the contrary by xxxxx I will assume that you are in agreement and will go ahead and..... etc etc
Click to expand...

Thanks, this is a good suggestion, but will it stand up in a court of law (assuming it eventually went down that route) when again nothing on his part gets done?
 
Upvote 0
stender said:
I think a couple of hundred quid for a consultation with a lawyer is your best way forward. We can offer opinions but you need to know where you stand legally. With no agreement theres lots of things you can do but you dont want them to come back and bite you later. eg Who holds the purse strings? are you able to start paying yourself extra?.
Click to expand...

Yes, fair enough. Thanks.

stender said:
Sounds a shame as It sounds like the sort of partnership that I am looking for and sounds like it has potential but this is putting me off partnerships. Seen too many similar posts.
Click to expand...

I am also involved in other projects, do get in touch if you are looking for a developer to work with :)
 
Upvote 0
IMO I think this is something that you are going to need to invest in. This is a huge priority in your life. Pay for professional help, worth it in the long run. Get 3/4 quotes from firms of solicitors that specialise in these kind of issues. Contact the Law Society and ask them to give you details of local specialists...
 
Upvote 0
I assume this is a Ltd Company?

1. Stop asking your partner and start telling them. They either need to help you run the business or they need to step aside and let you run it. Inform them that if they won't do either then clearly you would be better spending your efforts elsewhere and will resign and go off and do something else.... thus letting the company and their extra income shrivel and die.

2. At least a part of the problem seems to be that you are making the far too common mistake of mixing up Shareholder and Employee/Director. These are completely different things. You and your partner are shareholders - you get dividends just because you own shares. However that has nothing to do with the work you do for the company. Day to day running of the company is done by Employees/Directors (who may not be shareholders). These people get paid a salary/bonuses as a reward for their efforts. You are clearly an employee of the company and believe that you are doing all the work. You need to start taking a salary that rewards you for that work. Inform your partner that if he or his girlfriend want to step up and do their work then they to will get paid for it, but if not you will hire someone else to do it and pay them - obviously all these salaries will reduce the amount of profit in the company and thus your dividends. That means you will start to get more from the company that your partner does, which is fair as you do the work.

3. If your partner wont agree/blocks you then that tells you all you need to know. Resign and walk away and do something better with your time.
 
  • Like
Reactions: interwebs7 and ethical PR
Upvote 0
There are many options on which I can advise you by way of a strategy to follow but how to select what to pursue depends on having a more detailed knowledge of the background.

Obscure assumed it was a ltd company but there is much use of the word 'partnership'. 77com please confirm which,

If a partnership then you can easily dissolve it - and perhaps bid to buy and take over assets and start afresh. If you are running the business you are more likely to be able to acquire the assets on dissolution than is the other person. You are also probably closer to suppliers and market links.

If a limited company , you as one director who is essentially the de facto managing director, could award yourself a fair salary for your time. But do it in an open way with clear reasons and a rationale for the salary selected.

As an alternative, you can argue you no longer wish to be the sole person to run the company with no help from your co-shareholder and thus there is deadlock. In a sense your co-shareholder, by removing himself, would have likely breached the agreement you reached at the outset whereby you both would contribute. On the other hand as time has passed you have probably acquiesced. On that basis you could threaten, in the absence of an agreement perhaps to grant you more shares, to petition the court to wind it up under s122(1)(g) of the Insolvency Act 1986. Such an order has nothing to do with the solvency of the company. On that basis you could bid for any assets you would require to set up a new company.

You could always of course also just resign your employment and directorship and start afresh as has been suggested but of course it depends on the nature fo the business/assets/staffing etc

Its not just about what options you have but how to use them to encourage the other person to reach an agreement with you. That is what I do.

You can call me to take up my offer of a free 20mn call to help answer questions and give you a heads up on how to work out a successful strategy.
 
Upvote 0
@obscure - thanks for your advice. Yes this is a LTD. I would happily resign, but this would leave my partner in a position to pay himself or his girlfriend a salary such that there will be no dividends for me (he is also a director). The problem is that this is an affiliate commission-based business, and even if we do nothing we will still earn commission on historic leads for many more months to come. True, the business will dwindle if its not topped up with new leads, but I wouldn't want to just hand that residual income over to them.

@The Resolver - thanks for your help. This is a LTD, my partner is also a director. I wouldn't want to just resign (although am very tempted) due to the reasons mentioned above.

I will make one last attempt to resolve this by meeting up and getting it sorted there and then. Otherwise, I will have no other option but to seek legal support.

Thanks again for all your help and advice.
 
Upvote 0
I'm sure other will correct me if I am wrong, but you can resign as a Director, stop doing any work on the business, but remain a shareholder. You'd have to endure the pain of watching your business collapse, but at least the partner wouldn't get any more than you out of it going forward.

It may also prompt him to negotiate with you again, which would be the time to insist on a fair salary for the work you are doing as an employee of the company.
 
Upvote 0
77com said:
@obscure - thanks for your advice. Yes this is a LTD. I would happily resign, but this would leave my partner in a position to pay himself or his girlfriend a salary such that there will be no dividends for me (he is also a director).
Click to expand...
In that case don't resign.... just stop working. Spend your time on your other ventures, just as your partner is doing, and take the declining dividends until the money runs out.
 
Upvote 0
@Nord20 - if I resigned then my partner would be sole director and could pay himself and his girlfriend any salary he wanted, leaving nothing for me in dividends. See above post. Thanks though.
 
Upvote 0
obscure said:
In that case don't resign.... just stop working. Spend your time on your other ventures, just as your partner is doing, and take the declining dividends until the money runs out.
Click to expand...

Yes OK, point taken, but how much can I do within the law before he could take me to court for "competing" with the business we have together?
 
Upvote 0
A question from us.
Are look looking to glean as much free advice as you can get before making a decision.
You get sound advice then ask another question about how far you vcan go without breaching the law.
Our advice is don't rely on free advice on a forum, but use that advice to invest in paid legal advice..A bit like getting directions from a local then cross referencing it on a map you have purchased
Free legal advice on forums and in the public bar should be taken with a pich of salt, but professional legal people have set out your case on here and you should take note..
 
Upvote 0
CW Legal Services said:
A question from us.
Are look looking to glean as much free advice as you can get before making a decision.
You get sound advice then ask another question about how far you vcan go without breaching the law.
Our advice is don't rely on free advice on a forum, but use that advice to invest in paid legal advice..A bit like getting directions from a local then cross referencing it on a map you have purchased
Free legal advice on forums and in the public bar should be taken with a pich of salt, but professional legal people have set out your case on here and you should take note..
Click to expand...

I am looking to get people's views and feedback based on their experience, in order to understand more about the situation. Once I know, or at least understand, more about my options then I will be in a better position to make a decision on where I want to go with it - to resolve it amicably with my partner, or to go down the legal route...

Some of the advice I have received isn't applicable due to my situation, hence why I may have appeared to be asking more and more questions. I like to understand why things are the way they are, not just listen to people and act on it without understanding why.

I have learnt a lot from this discussion, and I thank everyone who has taken the time to help. I also hope it helps others reading this forum who are in a similar position.

As mentioned above, I will make one last attempt to resolve this by meeting up and getting it sorted there and then. Otherwise, I will have no other option but to seek legal support.

I hope i've answered your question. Many thanks again for your advice.
 
Upvote 0
How well established is your site/app? what sort of ranking/traffic? If you setup another company doing the same thing could you equal/better the traffic easily? if yes do that. PM me if you need a better partner :-)
 
Upvote 0
stender said:
How well established is your site/app? what sort of ranking/traffic? If you setup another company doing the same thing could you equal/better the traffic easily? if yes do that. PM me if you need a better partner :)
Click to expand...

Absolutely I could. The current site is well established, but its hanging on to its rankings by the skin of its teeth. Which is one of the main reasons i'm here - I want to improve rankings and solidify them, but if we don't see eye to eye, can't work together, or don't redesign/redevelop new features etc then I'm quite sure it won't be long until those rankings are gone and someone else takes the top spots. Some rankings might not be easily beaten, or can't be, due to the age of the site, but others with low competition (which currently drive most of the traffic) could be snapped up quite easily. It's those that I would concentrate on if we can't work it out between us, but that's a last resort, and as mentioned previously, i'm not sure where that would sit legally.

I'll ping you a pm anyway to see if we can help each other out on other projects. Always looking for new partners/ventures ;)
 
Upvote 0
77com said:
Haha, i've offered them, not interested, presumably because it means more work...!
Click to expand...
Shame ;)
Advice given before but advise by email the work you need to get done will be done you at a salaried or fixed rate, and should he object that he must reply to you by phone or in person within 24 hours of time email sent (not received)
 
  • Like
Reactions: interwebs7
Upvote 0
menetworkjadaltd said:
Shame ;)
Advice given before but advise by email the work you need to get done will be done you at a salaried or fixed rate, and should he object that he must reply to you by phone or in person within 24 hours of time email sent (not received)
Click to expand...

And if not even reading emails every 24 hours this works?
Or would longer timescale be better?
 
Upvote 0
Mr D said:
And if not even reading emails every 24 hours this works?
Or would longer timescale be better?
Click to expand...
Longer timescale just prolongs the process. He could send an email and then a text and a Whatsapp message to follow. There is no partnership agreement in place, so therefore no minimum timescale for response has been set. :)
 
Upvote 0
You must log in or register to reply here.

Similar threads

S
  • Ask a Question Ask a Question
Insolvency disputes
Replies
4
Views
635
Legal, Employment and Insolvency
chenmichael
C
Ivanzyt
Duty to give tax advice
Replies
19
Views
4K
Legal, Employment and Insolvency
nelioneil
nelioneil
D
Corperation Tax Debt help
Replies
4
Views
414
Legal, Employment and Insolvency
UK Contractor Accountant
UK Contractor Accountant
E
CVL vs Time to Pay
Replies
9
Views
2K
Legal, Employment and Insolvency
Lisa Thomas
Lisa Thomas
R
Help with Rent
Replies
34
Views
3K
Legal, Employment and Insolvency
Michael Loveridge
M

Latest Articles

Top Bottom
Back