Advice on Director's Behaviour, 50% shareholders 2 Directors

Discussion in 'Legal' started by richl1980, Feb 9, 2018.

  1. richl1980

    richl1980 UKBF Newcomer Free Member

    8 0
    Hello,

    Hopefully I am posting in the right place and I have been meaning to seek further advice for a few months given my lack of business nous.

    A summary: I am a 50% shareholder and director alongside my business partner who has an equal interest in a LTD company set up 4 years ago. It is an online business where we both work remotely, on opposite sides of the country. Commmunication is mostly via online means.

    We toiled for 18 months and finally started generating revenue and paying ourselves a wage.

    Since then, I've noticed the work input/output from my colleague has dropped significantly and I started to openly question how his time was spent, and how he could start showing more accountability in that regard. I'd known he suffers from ADHD quite badly so focus is an issue. Our product mostly relies on me as a programmer, enough for my absence to prevent the product being provided. We agreed that I would deal with those matters, and he would deal with marketing and customer support.

    Over time, there was a track record of half finished marketing projects, but more importantly, ignored responsibilities on a day to day basis like dealing with customer support issues, replying to emails etc. He has also been dealing with personal issues after splitting up with his wife and children, which I've made a lot of allowances for with his absence and moving forward in his personal life.

    Though, longer term, after pressing him hard on how time was spent, he has gradually reduced his visibility online and will also ignore my own emails as well as customers. This has been happening for about 12 months now. I think it would be a fair summary to say that his attentions are not focused on the well being of the company as a whole, and more to his own daily musings.

    When the business was created, he created the bank account under his own name, Paypal accounts and whatnot. I briefly had access to the bank account and questioned some expenses such as his Internet connection (and lack of invoices in our accounting software) and purchases in the £300-£500 region which he said were for the company but can easily be argued were more for personal reasons (the assets are business related but could easily be construed as not being). They are domain names. They are actually within an account that is under his personal name rather than the business.

    Since mentioning my access to the bank account, I was then locked out of it deliberately by my business partner. I'd already sent forms down to him including all my necessary details which 'apparently didn't reach the bank'.

    I suspect my business partner is slightly depressed by his life situation, but he's also making life difficult for me without justification and doesn't appear to be furthering the cause of the business. I'm semi-aware that there's not much I can do within the business, but I have suggested paying him off for 6 months if he resigns as a director. That seems to be a non-option.

    In my position, what would you recommend being the best foot forward? It's already been suggested to me that I simply resign and walk away, this basically means losing my monthly wage and the company would likely cease trading.

    Thanks for any advice offered
     
    Posted: Feb 9, 2018 By: richl1980 Member since: Feb 9, 2018
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    13,932 2,974
    You could resign as a director and carry on as an employee if you think the business still has prospects.
     
    Posted: Feb 9, 2018 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    From what you say and the fact you have no control over the bank account , I would myself walk the walk and start again using all the experience you have gained
     
    Posted: Feb 9, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #3
  4. richl1980

    richl1980 UKBF Newcomer Free Member

    8 0
    The main reason I ask is because I'm was due to be paid this week but it has not arrived. It is mere brinkmanship by my colleague.

    Carrying on as an employee would seem pointless without pay. There is only email agreement about wage / responsibilities.
     
    Posted: Feb 9, 2018 By: richl1980 Member since: Feb 9, 2018
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    10,121 1,063

    What do you want to do?
     
    Posted: Feb 9, 2018 By: Mr D Member since: Feb 12, 2017
    #5
  6. Scalloway

    Scalloway UKBF Legend Free Member

    13,932 2,974
    Then walk away and put in a legal claim for unpaid wages. I can't see the business going anywhere.
     
    Posted: Feb 9, 2018 By: Scalloway Member since: Jun 6, 2010
    #6
  7. CW Legal Services

    CW Legal Services UKBF Regular Free Member

    156 23
    Shareholder's Agtreement? in place
     
    Posted: Feb 9, 2018 By: CW Legal Services Member since: Jan 19, 2016
    #7
  8. The Byre

    The Byre UKBF Ace Free Member

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    You offer him a very small sum for his share and if he refuses, pull the plug and start afresh.

    Right now, what you have there is a dead parrot.
     
    Posted: Feb 9, 2018 By: The Byre Member since: Aug 13, 2013
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    It is an ex parrot, it has ceased to be.
     
    Posted: Feb 9, 2018 By: Mr D Member since: Feb 12, 2017
    #9
  10. richl1980

    richl1980 UKBF Newcomer Free Member

    8 0
    There is a shareholder agreement.

    Not quite a dead parrot, the company does turnover ~140K and without the spare part half is profit
     
    Posted: Feb 9, 2018 By: richl1980 Member since: Feb 9, 2018
    #10
  11. Mr D

    Mr D UKBF Legend Free Member

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    And you don't control the bank account. So besides having half the shares and responsibilities as a director what do you have?
    £140k turnover pays your bills?
     
    Posted: Feb 9, 2018 By: Mr D Member since: Feb 12, 2017
    #11
  12. richl1980

    richl1980 UKBF Newcomer Free Member

    8 0
    Yes, it pays my bills.

    So controlling the bank account... are you saying I have little control over matters because I can't see bank statements and send money? I have access to the company debit card, I can buy things. I just can't use the bank account.

    Does the remedy for bank access rely on the goodwill of my co-director, or am/should I inherently I access?
     
    Posted: Feb 9, 2018 By: richl1980 Member since: Feb 9, 2018
    #12
  13. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    2,349 290
    Why don't you have an open conversation with your fellow Director.

    Explain your frustrations and that you are considering resigning as a Director - (but continuing to be a shareholder) if you things don't change.
     
    Posted: Feb 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #13
  14. richl1980

    richl1980 UKBF Newcomer Free Member

    8 0
    Oh I've definitely tried that. We can have a rational conversation and agree for him to do X and Y, 48 hours later he'll be doing something different. When addressing the situation of X and Y you get a mix of vague statements and a lot of defensiveness. Press him more and you get a change of topic and lots of irrational.

    But thanks all for the advice, seems I've learned the hard way and to have everything written down in stone for later insurance.
     
    Posted: Feb 9, 2018 By: richl1980 Member since: Feb 9, 2018
    #14
  15. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    2,349 290
    In which case I would seriously consider resigning.
     
    Posted: Feb 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #15
  16. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,692 1,953
    Have you claimed copywrite on what you have done or did you give it to the company, probably academic but might be a bargaining point

    Look up your powers as a 50% shareholder on google
     
    Posted: Feb 9, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #16
  17. nelioneil

    nelioneil UKBF Enthusiast Full Member

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    Posted: Feb 10, 2018 By: nelioneil Member since: Jan 22, 2013
    #17
  18. The Byre

    The Byre UKBF Ace Free Member

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    The thing is here - we can all chirp away with our 30 cents worth of wisdom, but the reality is, that the OP has to get over to his partner in crime and find out what is really going on. Drugs, alcohol, depression, despair? What?

    For all we know, his partner is wallowing in Pilgrim's 'Slough of Despond' and in reality is desperate for any and every bit of help he can get.

    He also has to get some proper advice from a professional that is well-versed in company law and here, of course, @The Resolver springs to mind (again!) I suggest that the OP gets in touch with him and gets a reasonable perspective on the situation.

    One can only really give any helpful advice, after finding out what exactly is going on - and even the OP has no idea what the score really is!
     
    Posted: Feb 11, 2018 By: The Byre Member since: Aug 13, 2013
    #18
  19. Newchodge

    Newchodge UKBF Big Shot Free Member

    10,170 2,619
    If you can't see the bank statements how do you know what the company money is being speny on? As a director you have a duty to ensure that company funds are being spent properly. Of course you should have automatic access to the bank account
     
    Posted: Feb 11, 2018 By: Newchodge Member since: Nov 8, 2012
    #19
  20. The Resolver

    The Resolver UKBF Ace Full Member

    2,976 971
    A very common problem. Ownership and Board control is split down the middle but a combination of personal conflict and control of the monies (and sales and marketing channels?) by one severely prejudices both the company's fortunes and those of the interests of both of the shareholders.

    I specialise in either mediating these 50/50 splits to help you both see a solution in both your interests (for which I need instructions from both of you ) or advise and represent just yourself in negotiations with the other person. I can give you practical advice of steps to take but if I did that now I would then compromise my neutrality and my ability to take on instruction as mediator should you wish me to. If you would like to know more as to how I can assist (I do this work for clients literally every day) I can give you a free 20mn call to give a basic 'heads up' on your rights , much as I would in mediation and explain how shareholder mediation would work (don't confuse with any other service that uses the word 'mediation') . To avoid confusion within mediation I would inform you of your rights and practical steps available to you but as part of mediation, whilst doing the same with your co-shareholder. It is when you both are fully informed fo the problems for both of you if continue as at present that a resolution becomes more possible.

    What I can say just now without compromising my position if instructed later by both of you is DO NOT RESIGN as a director. Maybe later but not now until you are fully informed of the impact. Once you do that you lose much of your power. It would help if before any call (07885 728801) you checked who is the Registrant of the domain name (if unsure go to www.whois.com) and who has the login to the web/mail server account .It would also be best you emailed me the Shareholders Agreement - [email protected]

    To all- I know I am being a little less forthcoming in this post here than usual but its just that in this particular case I feel it is very suitable for a speedy resolution through shareholder mediation and want to allow that opportunity before I go into detail of what he can do. I am also taking into account that the 'brinkmanship' over his wages,
     
    Posted: Feb 12, 2018 By: The Resolver Member since: Mar 31, 2006
    #20