50% director terminated without my consent

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STDFR33

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Aug 7, 2016
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The legal advice I have been given is that as I was basically sacked for no reason opening up as a direct competitor would have no conflict of interest. Also being a 50% shareholder a lot of mischief can be had!

So did you open another company in direct competition?

Was this before or after the co-director froze you out?
 
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STDFR33

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Mr D

At some point the co-director would have forged a signature or lied about OP not being reachable to get him terminated. Terminating directors requires a majority board decision, they cannot get a majority by themselves.

This is a criminal matter, not some disagreement about whether they own 35% or 40% of a share in the company.

You are assuming both shareholders hold the same voting rights.
 
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Mr D

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Feb 12, 2017
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Mr D

At some point the co-director would have forged a signature or lied about OP not being reachable to get him terminated. Terminating directors requires a majority board decision, they cannot get a majority by themselves.

This is a criminal matter, not some disagreement about whether they own 35% or 40% of a share in the company.

By all means get the police involved in something. They can also ignore plenty.
Including disagreements within a company.
 
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Karimbo

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Nov 5, 2011
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You are assuming both shareholders hold the same voting rights.
That's true, perhaps davebristol can clarify.

To be honest, the other director sounds like a scumbag.

I'd refuse to pay the corporation tax. If there's any value in shareholding take it - otherwise forefeit it.

You'll need to balance out whether to pay the corporation tax and get a settlement or just leave without settlement.

If you can get a settlement You'll need an agreement in place that you've parted ways and you keep your respective clients and sign a non-compete agreement that you dont poach each others customers for at least 12 months. How this will play out is a different issue altogether. The one who controls the company emails is ultimately the one who can enforce [and abuse] this.

You'll get clients emailing the company email 3-4 months down the line. if he controls the emails will he forward your clients enquiries to you?
 
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Mr D

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Feb 12, 2017
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That's true, perhaps davebristol can clarify.

To be honest, the other director sounds like a scumbag.

I'd refuse to pay the corporation tax. If there's any value in shareholding take it - otherwise forefeit it.

You'll need to balance out whether to pay the corporation tax and get a settlement or just leave without settlement.

If you can get a settlement You'll need an agreement in place that you've parted ways and you keep your respective clients and sign a non-compete agreement that you dont poach each others customers for at least 12 months. How this will play out is a different issue altogether. The one who controls the company emails is ultimately the one who can enforce [and abuse] this.

You'll get clients emailing the company email 3-4 months down the line. if he controls the emails will he forward your clients enquiries to you?

Of course he should refuse to pay the corporation tax. Only the company owes it - the individual shareholders or directors are not liable.
Its a company debt. Not a personal debt.
 
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davebristol

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Dec 9, 2019
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That's true, perhaps davebristol can clarify.

To be honest, the other director sounds like a scumbag.

I'd refuse to pay the corporation tax. If there's any value in shareholding take it - otherwise forefeit it.

You'll need to balance out whether to pay the corporation tax and get a settlement or just leave without settlement.

If you can get a settlement You'll need an agreement in place that you've parted ways and you keep your respective clients and sign a non-compete agreement that you dont poach each others customers for at least 12 months. How this will play out is a different issue altogether. The one who controls the company emails is ultimately the one who can enforce [and abuse] this.

You'll get clients emailing the company email 3-4 months down the line. if he controls the emails will he forward your clients enquiries to you?


Hello

Since November 2019 I have nothing to do with the company. Re email - He's welcome to them, he is the worlds worst salesperson.

Things are playing out fine with me, Ive set up a new business and all is good
 
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Karimbo

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Nov 5, 2011
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Sounds like you have things sorted.

Just make sure there are no debts incurred on anything that you're a personal guarantor for.

If you signed anything with a personal guarantee and there isn't an outstanding balance on, contact the credit account and remove yourself from the personal guarantee.

It's best to conclude everything with this joint company, withdraw any interest in it, and remove any shareholding.

If his business crumbles and goes south, and you have a competing business and becomes very successful in a couple of years time. He may try his luck and say that you're a bad leaver and left their joint entreprise to compete with the original company and claim 50% share in yours.
 
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davebristol

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Dec 9, 2019
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Sounds like you have things sorted.

Just make sure there are no debts incurred on anything that you're a personal guarantor for.

If you signed anything with a personal guarantee and there isn't an outstanding balance on, contact the credit account and remove yourself from the personal guarantee.

It's best to conclude everything with this joint company, withdraw any interest in it, and remove any shareholding.

If his business crumbles and goes south, and you have a competing business and becomes very successful in a couple of years time. He may try his luck and say that you're a bad leaver and left their joint entreprise to compete with the original company and claim 50% share in yours.

Hi

I’ve signed no personal guarantees. Removing any shareholdings is a very good idea. I was thinking about that last week.

Many thanks for your advice
 
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Karimbo

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Nov 5, 2011
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The settlement is quite important, I'm not a lawyer.

I started my business, I was a SEO for a living, I wanted to team up with an established business owner. I developed and marketed the website, he was meant to put money in to fund the business. He "borrowed 10K from me" to put into the business assets and made no intention to pay me back.

We didn't form a ltd company, so just used his business to "feel things out", he kept making excuses to delay forming the new ltd. I sensed something wasn't right. I wanted to part ways, but needed my 10K back. I eventually got paid after a public spat on fb about why I haven't got my money back.

After I got my money back, I took the website, he took all the stock and we went our own ways. I remember posting about this on this forum years and years ago. The advice I got was get an agreement in writing that you're parting ways because either party can claim a share in the others' business because we had a verbal agreement to work together at some point.

The other party is up to no good. I learnt of some vat fraud, acquiring stock from rogue suppliers. Had police pop round wanting to know the origin of some computer hard drives they sold on ebay, basically a truckload of it got stolen, he bought a pallet load from someone and put it up on ebay with 100+ stock like an idiot that he is. Police were useless, they just popped in, got fobbed off with an explanation that they acquired it from germany with fake invoices and they went on their merry way.

On google reviews, some ex-employee accusing them of fraud that HMRC were investigating. He stepped down from his directorship and made his wife the director (she has no expeirence and has been a stay at home mum all her life). The google review alleged that they abdicated their directorship to avoid an investigation/penalty.
 
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Mr D

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On google reviews, some ex-employee accusing them of fraud that HMRC were investigating. He stepped down from his directorship and made his wife the director (she has no expeirence and has been a stay at home mum all her life). The google review alleged that they abdicated their directorship to avoid an investigation/penalty.

Its always good when family members step up to run things.
Pretty much every director at one point had no experience.

Giving up directorship to avoid court taking away from them? Common enough.
Have heard of it dozens of times over the years.
 
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