Business partner demands to be account signatory

Deleted member 318486 · Mar 24, 2019

Hello everyone,

I have a question that relates to a much serious issue, however I wanted to know where I stand?
I have a business partner 50/50 who has requested to be a signatory on the business bank account.
He wasn’t a signatory at the time the account was setup and wasn’t a director either at that time.
Is it illegal to object and refuse him such access?
Recent actions have left me worrying why he wants access now? He says he can freeze the accounts
Which would cause bigger issues for the business. I don’t know how true that is either he is at best trying to cause me as much stress as possible. He has a solicitor as a partner and he already threatened me with action/s as his partner is far cleverer than me he says!
He pushed for a company valuation and wanted me to buy him out and pay him a sum of money that he wants the business to pay which is a private debt he inherited when he was a sole trader at the time.
This is what has a caused the rifled between us now as I don’t feel he has the right to demand this company pay his debt off. I just would like clarification as to whether or not I have to legally agree to his demand to be a signatory on the company bank account?
Can anyone help me here with clear and precise knowledge what is legal or illegal as far as his request goes? Can he also freeze the accounts?

Newchodge · Mar 24, 2019

I assume this is a Ltd company. I also assume he is a 50:50 shareholder and director?

If that is the case he has identical rights to you. Why should you be a signatory on the bank account?

This is very indicative of a much deeper problem. I assume you haven't got a proper shareholder's agreement? I suggest you seek advice urgently, @The Resolver may be able to assist.

If he is not a director, just say no.

paulears · Mar 24, 2019

If you are a 50/50 business, then why has he no access to the bank account? Seems a rather unbalanced 50/50. You both seem to share the legal responsibility, tax and other responsibilities equally. If he joined this forum and said he was a 50/50 partner in a business and the other partner would not give him access to the bank account, what do you imagine we would suggest?

Chris Ashdown · Mar 24, 2019

I would let him have access to the bank accounts to view the accounts as his right as a director to be fully aware of what happens in a company he is jointly responsible for, I don't know if you can still need joint signatures to make a payment you used to on cheques, but with his attitude I would not give him power to use the account unless he got a court order ordering you to

He requests you refuse its a 50%/50% stalemate

If he damages the company in any way he is breaking his legal duty to the company as a director and you could take action against him in court

What is the shareholding of all shareholders

paulears · Mar 24, 2019

Seriously? This would not be the advice we would have given him if he joined is it? What attitude? If I owned half a business and my business partner could empty the bank account and I couldn't, I'd not be that happy? It's clearly NOT a 50/50 partnership.

Mr D · Mar 24, 2019

Chubbybear1 said:
Hello everyone,

I have a question that relates to a much serious issue, however I wanted to know where I stand?
I have a business partner 50/50 who has requested to be a signatory on the business bank account.
He wasn’t a signatory at the time the account was setup and wasn’t a director either at that time.
Is it illegal to object and refuse him such access?
Recent actions have left me worrying why he wants access now? He says he can freeze the accounts
Which would cause bigger issues for the business. I don’t know how true that is either he is at best trying to cause me as much stress as possible. He has a solicitor as a partner and he already threatened me with action/s as his partner is far cleverer than me he says!
He pushed for a company valuation and wanted me to buy him out and pay him a sum of money that he wants the business to pay which is a private debt he inherited when he was a sole trader at the time.
This is what has a caused the rifled between us now as I don’t feel he has the right to demand this company pay his debt off. I just would like clarification as to whether or not I have to legally agree to his demand to be a signatory on the company bank account?
Can anyone help me here with clear and precise knowledge what is legal or illegal as far as his request goes? Can he also freeze the accounts?

Well if he wants you to buy him out then you would be buying his shares off him and what he does with the money is up to him. A sole trader debt belongs to the person, not a limited company.

Deleted member 318486 · Mar 24, 2019

Newchodge said:
I assume this is a Ltd company. I also assume he is a 50:50 shareholder and director?

If that is the case he has identical rights to you. Why should you be a signatory on the bank account?

This is very indicative of a much deeper problem. I assume you haven't got a proper shareholder's agreement? I suggest you seek advice urgently, @The Resolver may be able to assist.

If he is not a director, just say no.

So there is no legal precinct that allows me to
Stop him from having signatory rights?
That was the question I posted basically.

Thank you for the advice, further to this can one partner make the other buy their share in the business?
Or can the business buy back the shares without the consent or the other partner?

Deleted member 318486 · Mar 24, 2019

Mr D said:
Well if he wants you to buy him out then you would be buying his shares off him and what he does with the money is up to him. A sole trader debt belongs to the person, not a limited company.

Newchodge said:
I assume this is a Ltd company. I also assume he is a 50:50 shareholder and director?

If that is the case he has identical rights to you. Why should you be a signatory on the bank account?

This is very indicative of a much deeper problem. I assume you haven't got a proper shareholder's agreement? I suggest you seek advice urgently, @The Resolver may be able to assist.

If he is not a director, just say no.

paulears said:
If you are a 50/50 business, then why has he no access to the bank account? Seems a rather unbalanced 50/50. You both seem to share the legal responsibility, tax and other responsibilities equally. If he joined this forum and said he was a 50/50 partner in a business and the other partner would not give him access to the bank account, what do you imagine we would suggest?

Thank you for the advice, further to this can one partner make the other buy their share in the business?
Or can the business buy back the shares without the consent or the other partner?

Newchodge · Mar 24, 2019

Chubbybear1 said:
So there is no legal precinct that allows me to
Stop him from having signatory rights?
That was the question I posted basically.

Thank you for the advice, further to this can one partner make the other buy their share in the business?
Or can the business buy back the shares without the consent or the other partner?

Not unless you have a shareholders agreement that covers this

Mr D · Mar 24, 2019

Chubbybear1 said:
So there is no legal precinct that allows me to
Stop him from having signatory rights?
That was the question I posted basically.

Thank you for the advice, further to this can one partner make the other buy their share in the business?
Or can the business buy back the shares without the consent or the other partner?

Why would someone with exact same powers and responsibilities as you not have signatory rights?
If you are concerned over abuse of bank account then maybe transactions requiring both signatures would work.
Though can bite you too - that causes chaos when the pair of you disagree on something or fall out, things do not get paid.

Making the other shareholder do something? Not normally.

The business is a seperate legal entity but in itself it does not make decisions. Buying back shares using the company would be a decision made by the humans.

The same rules protect you as protect him.

pentel · Mar 25, 2019

Hi

You talk about a business partner and then shares.

Is this a limited company or a partnership?

This makes a HUGE difference but you have not clarified this despite being asked several times.

Deleted member 318486 · Mar 25, 2019

This is a 50/50 share holding of a private Ltd company
And both partners are Directors

finleydesign · Mar 25, 2019

Chubbybear1 said:
This is a 50/50 share holding of a private Ltd company
And both partners are Directors

So he has every right to be a signatory and has exact rights as you do at 50/50 you don't call the shots and actually by doing so you could be raising his suspicions to why he can't have access to whats he entitled to, I know it doesn't help but this tends to be why 50/50 can be a nightmare

Deleted member 318486 · Mar 25, 2019

You reply makes me out to be as if I am being awkward or doing him wrong!
I have posted questions as I wish to receive advice on the questions not to be made to feel
I am doing or being the issue.
If you knew the whole history and how this person behaves then you’d have a better understanding of him and how I feel.
Blimey I don’t think I’ll be using your forum again in a hurry judgemental or what!

finleydesign · Mar 25, 2019

Chubbybear1 said:
If you knew the whole history and how this person behaves then you’d have a better understanding of him and how I feel.

Ok but we are trying to point out that the history, and issue that are on-going doesn't give you the right to make the decisions, and you need to understand that maybe seek some legal advise, albeit as many have said 50/50 means you are both identical in access to the account

You need to understand you have no right to refuse or make the decision, as you are both 50/50 you need identical access, control and powers as each other

If you question any of this, or choose to refuse, then as I say he could certainly argue it's you that's the problem, you sadly by the sounds of it, don't have the ability to undermine, and I'm not sure you could provide sufficient grounds to dictate to him what he can and can't have.

If you can't handle the truth then yes maybe leave, and go and ask someone who will fill you with what ever nonsense you would like to believe

Mr D · Mar 25, 2019

Chubbybear1 said:
You reply makes me out to be as if I am being awkward or doing him wrong!
I have posted questions as I wish to receive advice on the questions not to be made to feel
I am doing or being the issue.
If you knew the whole history and how this person behaves then you’d have a better understanding of him and how I feel.
Blimey I don’t think I’ll be using your forum again in a hurry judgemental or what!

We don't need to know your problems with him to know what he is entitled to.

The company appears to have one director with control and one director with same responsibilities without control.
The shareholding is 50/50, the directorship isn't.

pentel · Mar 25, 2019

It sounds like he wants out, but at a price.

He is asking for a company valuation and probably expecting you to buy him out at half that figure. There are numerous threads on this forum about company valuations and how in reality the value of a company is what someone is prepared to pay. :Look up "Clinton" on this forum who has lots of sensible things to say about valuations

It sounds like you want him out also so at least you are both starting from the same point.

Is there sufficient funds within the company to buy his shares back? Do you think you can agree a valuation?

Look up "the resolver" on this forum for possible involvement with sorting this.

Deleted member 318486 · Mar 25, 2019

Well those 2 responses surely vaildatited my point!
Your judging and very judgemental
I’m more than capable of telling him no, my idea to speak out on the forum was to ensure we both not me are doing things correctly.
You last 2 responders really need to wind your necks in and be less aggressive in your replies and advice!
I am sure this site was set up to help and advise
Not criticise people who are indeed of some reassurance.
Think about it before your respond again albeit I don’t believe you need to.

I have requested to be removed from the site and it wasn’t due to your words just now. However after them I am glad I have been asked to be received and the sooner the better.
Really take a step back and think before engaging your mouth before your brains!

Mr D · Mar 25, 2019

Chubbybear1 said:
Well those 2 responses surely vaildatited my point!
Your judging and very judgemental
I’m more than capable of telling him no, my idea to speak out on the forum was to ensure we both not me are doing things correctly.
You last 2 responders really need to wind your necks in and be less aggressive in your replies and advice!
I am sure this site was set up to help and advise
Not criticise people who are indeed of some reassurance.
Think about it before your respond again albeit I don’t believe you need to.

I have requested to be removed from the site and it wasn’t due to your words just now. However after them I am glad I have been asked to be received and the sooner the better.
Really take a step back and think before engaging your mouth before your brains!

If you want to be told just stuff you want to hear I'm sure there are sites to do that.
People will lie to you and make you feel good.

Won't solve your problems but you can feel good.

finleydesign · Mar 25, 2019

Chubbybear1 said:
I’m more than capable of telling him no

You don't have the legal right to do so, but as this isn't what you want to hear, your throwing a hissy fit!, You need to find a forum which will massage your ego and tell you what you want to hear rather then what's correct, what was the point in asking, seriously some people!

I'm starting to see who's the problem in this partnership!! You have some serious issues you need to address first personally

Chris Ashdown · Mar 25, 2019

Looking at it from what we are told

The partner of the company wants to leave and has a personal debt caused by his previous action as a self trader

The same person has threatened to freeze the account

The same person wants to be brought out presumably to pay off his debts

The company has presumably worked well with one person with access to the bank account

All directors should have access to the bank statements but few companies have more than one or two people in control of the bank account

What motive does the one person who is locked out have to need access now

The courts may force the issue but that would take time and not i would guess guaranteed in this instance

As a Shareholder he can request a independent audit if he thinks there is something wrong with the accounts

kkfcXHzmCc · Mar 25, 2019

As Chris said above. However, I feel that you have a personal vendetta against said partner. Why go in to business with someone like this?

petros3 · Mar 29, 2019

The very idea of denying the owner of 50% of the shares access to the company bank account is bizarre. It is not as if he can legally syphon off money from the account.

Newchodge · Mar 29, 2019

petros3 said:
The very idea of denying the owner of 50% of the shares access to the company bank account is bizarre. It is not as if he can legally syphon off money from the account.

I assume you mean denying a co-director, a shareholder has no right to access the company bank account.

Mr D · Mar 29, 2019

petros3 said:
The very idea of denying the owner of 50% of the shares access to the company bank account is bizarre. It is not as if he can legally syphon off money from the account.

I'd hope any shareholder gets denied access to the bank account. Though from posts on here over the years not every company operates that way.

Chris Ashdown · Mar 29, 2019

petros3 said:
The very idea of denying the owner of 50% of the shares access to the company bank account is bizarre. It is not as if he can legally syphon off money from the account.

There would be nothing to stop him taking out a large loan from the account, and assuming it does not actually damage the company, but enough to restrict growth, which may not be easy to prove, the loan could be for a long time

nelioneil · Mar 29, 2019

Chris Ashdown said:
There would be nothing to stop him taking out a large loan from the account, and assuming it does not actually damage the company, but enough to restrict growth, which may not be easy to prove, the loan could be for a long time

That is true but no different to any other company. The problem is the director should have been given access at the start and that director could argue that they cannot fulfil some of their duties as a director, due to lack of some accounting records and balances.

Chris Ashdown · Mar 29, 2019

That's rubbish, you don't need to be a signature on the account, to have all the financial records which is your right anyway as a director, it's two seperate things, few directors of companies have access to actually make payments probably the MD and financial director others just have access to the account data and monthly accounts or day to day accounts

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