- Original Poster
- #1
Newbie here so firstly a little history on the situation. Sorry it's a little long.
I (D1) started my own company, as a sole trader, in 2004 which went well and kept the wolf from the door for 3 years.
In 2007 a friend (D2), decided he was going to leave his employer, and suggested we start a Ltd Co with another friend of his (D3). We all had fairly similar business interests but would essentially each fulfil a different role within the company.
D2 brought with him a number of clients which his employer was effectively dumping as they were changing the direction of their business. D3 also brought a few clients with him but didn't start working for the new Co. officially for 6 months, to be honest I now feel he was hanging back to see if the company could work before sticking his neck out. As part of the deal with D2 and his previous employer he was contracted to do a set amount of hours of unpaid work for them, which he did whilst under the employment and pay of the new Co, he maintains he did this in his own time, but the Co was paying his way, and he was working from the companies offices, as it happened the previous employer went bust before he had completed the set number of hours. For the first 6 months it was the income from my clientbase that paid the now meagre salaries of D1 and D2. As it was at least 3 months before we started receiving any income at all from the client base that D2 brought with him and a further 4 before we saw anything from D3's clientbase.
To be honest the cracks started to appear almost immediately, well for me anyway as D2 would rock into work at 5pm, work till the early hours and then sleep all day, some days he would just not turn up at all. He had various altercations with D3 and myself and in reality is no more than an emotional bully that throws his toys out of the pram for petty reasons, especially if he doesn't get his way, his way is the only way and to hell with anyone that thinks otherwise. His conduct has been a lot to be desired and he's been rude to clients, contractors and suppliers, even loosing us a few clients along the way. I had to persuade D3 to stick it out after he signalled to me his intention to leave after one particularly vicious row about 18 months in.
After 2 3/4 years we took on a 4th Director/Shareholder, also a friend, who brought with him a very successful business.
We each had an equal 33.3% shareholding as it was decided in the early stages that it would be an utter nightmare to put a value on what each of us brought to the party, and the fairest thing would be to just split the vote/profit 3 ways, this later became 25% each and 4 ways.
This last year for me has really been testing, in the early stages I took on the roll of Admin, making sure invoices were sent, outstanding payments were chased, money made it to the bank and bills were paid, I did this because I didn't see either D2, 3 or 4 taking up the batton and would regularly find invoices not sent for days on end, cheques totalling 100's or 1000's of £'s on my desk and the amount owing to us figure steadily climbing on a weekly basis. We have just, after an extremely long and fraught process, taken on a part time admin to fill this role so I can get on with more productive things.
This week things I feel things have started to run away from me. D2, 3 and 4 decided some months ago that they wanted to implement a directors bonus scheme where we each get paid minimum wage, as we have been doing the past 3 years, then part of the companies profits to be paid as an equal dividend to each of us then what's left gets split according to what profit each of us brings into the Company, I feel there's been a lot of chinese whispers and hidden agendas going on for sometime and finally this week I called a meeting for them to put their cards on the table as I was getting pissed off with it. I was informed in no uncertain terms I wasn't bringing in enough profit for the company and under their new scheme wouldn't even qualify for my dividend at the end of the year as my figures were lower than theirs, when I pointed out that without my efforts the amount owed to us would be astronomical and there wouldn't be any cash in the bank to pay the dividend anyway, let alone a hefty reserve account balance, the response was pretty much tough your not pulling your weight. When I asked for details of their little scheme they didn't have any.
This I am completely against for a number of reasons. Most notably that I feel it will divide us all even more, it's going to cause even more arguments than we already have, some of which D2 can get quite vicious about, I was threatened with having my face smashed in if I didn't do some minor task the way he wanted it one afternoon, sometimes we also have to work together on some projects and deciding on how to split the spoils of those projects is going to cause more friction as one might spend more time than the other on the project but without the lessers contribution & efforts the project wouldn't have happened in the first place. We each brought different things in the first place and I feel that my initial contribution was actually worth more than theirs, I was working a 3 day week and now make less working a 5 to 6 day week. I've also bankrolled the Company to the tune of nearly £7.5K every month by allowing the company to use my personal credit card to purchase items to be sold on, fair enough the Company does pay that bill in full every month but it's still me that'll carry the can if it all goes titsup. Also non of us works the same amount of hours and I felt we should be formalising that in the first instance at the very least. There also seems to be a lot of "Oh I did that on my own time and didn't charge the Co for it" going on, but my take on it is that when you work for yourself their is no such thing as your own time. You do whatever it takes to get it done. I also pointed out that under such a system it would not be fair to have a free for all mentality when it comes to dividing up new work between us, again the response was tough, it will be.
They feel this will incentivise us to work harder and make more money to which my argument was that owning the company outright in the first place should really be incentive enough to get our arses out of bed in the morning and get our backsides to work.
This was put to a vote which came out 3 to 1 in favour. At this point I informed them that as a 25% shareholders I/we would still be each entitled to 25% each of any dividends voted at the end of the year until a new shareholders agreement was put in place, to which the response was tough the vote went against you you'll get what we decide according to your profit share. D2 then informed me that he doesn't trust me anymore, because I mis-quoted a couple of items that meant I didn't make as much as they could've done and thought I was favouring a particular client. I informed him that actually it was better to let the deal go through and keep the client happy than go back on a deal and potentially loose a good client. I feel that there's a lot of hidden agenda's going on and that D2 is playing D3 and 4 against me, infact D3 came to me a few days prior to the meeting saying what a nightmare the system for recording each directors income had become and what a pain in the arse D2 was being, yet in the meeting he was siding with D2 every step of the way. I had a similar experience with D4 prior to the meeting as well.
There is no shareholders agreement, just a standard Articles and Memorandum drawn up by our Accountants, yes now I know better, however it was decided some months ago that we should have a new shareholders agreement drawn up by a local solicitor, of which apart from an initial meeting nothing has happened yet.
So my questions are;
1. Can they force a new shareholders agreement on me?
2. What's the potential implication if I decide not to enter into that new agreement?
3. Can I refuse to enter into it and therefore bury it altogether?
4. Can they really decide between them what dividend each of us gets at the end of the year other than an equal 4 way split, without a new agreement? If not what should I be doing to make sure I get my 25%.
5. We currently each have some quite hefty Directors loans, which the Company could quite easily pay back as the cash is currently loosing money sat in a business reserve account. If I decide to jump ship, which I am sorely tempted to do as I really don't need the aggravation of working with them anymore now that the trust has gone, can they withhold that DL money from me and what would I need to do to call in that loan should I decide to quit.
I would really like to go back to working on my own again and take the clientbase that I initially brought with me. Can they stop me doing this? I would quite happily resign and give back my share in return for those clients along with a few essential items, notebook PC etc, repayment of my directors loan in full, my share of profits the company has made to date and release from any other financial obligations. Is this unreasonable? What's the best way of going about this? Or should I be doing the above and trying to get a settlement for my share as decided by 3rd party?
Sorry for the length of this post, thanks for your time.
I (D1) started my own company, as a sole trader, in 2004 which went well and kept the wolf from the door for 3 years.
In 2007 a friend (D2), decided he was going to leave his employer, and suggested we start a Ltd Co with another friend of his (D3). We all had fairly similar business interests but would essentially each fulfil a different role within the company.
D2 brought with him a number of clients which his employer was effectively dumping as they were changing the direction of their business. D3 also brought a few clients with him but didn't start working for the new Co. officially for 6 months, to be honest I now feel he was hanging back to see if the company could work before sticking his neck out. As part of the deal with D2 and his previous employer he was contracted to do a set amount of hours of unpaid work for them, which he did whilst under the employment and pay of the new Co, he maintains he did this in his own time, but the Co was paying his way, and he was working from the companies offices, as it happened the previous employer went bust before he had completed the set number of hours. For the first 6 months it was the income from my clientbase that paid the now meagre salaries of D1 and D2. As it was at least 3 months before we started receiving any income at all from the client base that D2 brought with him and a further 4 before we saw anything from D3's clientbase.
To be honest the cracks started to appear almost immediately, well for me anyway as D2 would rock into work at 5pm, work till the early hours and then sleep all day, some days he would just not turn up at all. He had various altercations with D3 and myself and in reality is no more than an emotional bully that throws his toys out of the pram for petty reasons, especially if he doesn't get his way, his way is the only way and to hell with anyone that thinks otherwise. His conduct has been a lot to be desired and he's been rude to clients, contractors and suppliers, even loosing us a few clients along the way. I had to persuade D3 to stick it out after he signalled to me his intention to leave after one particularly vicious row about 18 months in.
After 2 3/4 years we took on a 4th Director/Shareholder, also a friend, who brought with him a very successful business.
We each had an equal 33.3% shareholding as it was decided in the early stages that it would be an utter nightmare to put a value on what each of us brought to the party, and the fairest thing would be to just split the vote/profit 3 ways, this later became 25% each and 4 ways.
This last year for me has really been testing, in the early stages I took on the roll of Admin, making sure invoices were sent, outstanding payments were chased, money made it to the bank and bills were paid, I did this because I didn't see either D2, 3 or 4 taking up the batton and would regularly find invoices not sent for days on end, cheques totalling 100's or 1000's of £'s on my desk and the amount owing to us figure steadily climbing on a weekly basis. We have just, after an extremely long and fraught process, taken on a part time admin to fill this role so I can get on with more productive things.
This week things I feel things have started to run away from me. D2, 3 and 4 decided some months ago that they wanted to implement a directors bonus scheme where we each get paid minimum wage, as we have been doing the past 3 years, then part of the companies profits to be paid as an equal dividend to each of us then what's left gets split according to what profit each of us brings into the Company, I feel there's been a lot of chinese whispers and hidden agendas going on for sometime and finally this week I called a meeting for them to put their cards on the table as I was getting pissed off with it. I was informed in no uncertain terms I wasn't bringing in enough profit for the company and under their new scheme wouldn't even qualify for my dividend at the end of the year as my figures were lower than theirs, when I pointed out that without my efforts the amount owed to us would be astronomical and there wouldn't be any cash in the bank to pay the dividend anyway, let alone a hefty reserve account balance, the response was pretty much tough your not pulling your weight. When I asked for details of their little scheme they didn't have any.
This I am completely against for a number of reasons. Most notably that I feel it will divide us all even more, it's going to cause even more arguments than we already have, some of which D2 can get quite vicious about, I was threatened with having my face smashed in if I didn't do some minor task the way he wanted it one afternoon, sometimes we also have to work together on some projects and deciding on how to split the spoils of those projects is going to cause more friction as one might spend more time than the other on the project but without the lessers contribution & efforts the project wouldn't have happened in the first place. We each brought different things in the first place and I feel that my initial contribution was actually worth more than theirs, I was working a 3 day week and now make less working a 5 to 6 day week. I've also bankrolled the Company to the tune of nearly £7.5K every month by allowing the company to use my personal credit card to purchase items to be sold on, fair enough the Company does pay that bill in full every month but it's still me that'll carry the can if it all goes titsup. Also non of us works the same amount of hours and I felt we should be formalising that in the first instance at the very least. There also seems to be a lot of "Oh I did that on my own time and didn't charge the Co for it" going on, but my take on it is that when you work for yourself their is no such thing as your own time. You do whatever it takes to get it done. I also pointed out that under such a system it would not be fair to have a free for all mentality when it comes to dividing up new work between us, again the response was tough, it will be.
They feel this will incentivise us to work harder and make more money to which my argument was that owning the company outright in the first place should really be incentive enough to get our arses out of bed in the morning and get our backsides to work.
This was put to a vote which came out 3 to 1 in favour. At this point I informed them that as a 25% shareholders I/we would still be each entitled to 25% each of any dividends voted at the end of the year until a new shareholders agreement was put in place, to which the response was tough the vote went against you you'll get what we decide according to your profit share. D2 then informed me that he doesn't trust me anymore, because I mis-quoted a couple of items that meant I didn't make as much as they could've done and thought I was favouring a particular client. I informed him that actually it was better to let the deal go through and keep the client happy than go back on a deal and potentially loose a good client. I feel that there's a lot of hidden agenda's going on and that D2 is playing D3 and 4 against me, infact D3 came to me a few days prior to the meeting saying what a nightmare the system for recording each directors income had become and what a pain in the arse D2 was being, yet in the meeting he was siding with D2 every step of the way. I had a similar experience with D4 prior to the meeting as well.
There is no shareholders agreement, just a standard Articles and Memorandum drawn up by our Accountants, yes now I know better, however it was decided some months ago that we should have a new shareholders agreement drawn up by a local solicitor, of which apart from an initial meeting nothing has happened yet.
So my questions are;
1. Can they force a new shareholders agreement on me?
2. What's the potential implication if I decide not to enter into that new agreement?
3. Can I refuse to enter into it and therefore bury it altogether?
4. Can they really decide between them what dividend each of us gets at the end of the year other than an equal 4 way split, without a new agreement? If not what should I be doing to make sure I get my 25%.
5. We currently each have some quite hefty Directors loans, which the Company could quite easily pay back as the cash is currently loosing money sat in a business reserve account. If I decide to jump ship, which I am sorely tempted to do as I really don't need the aggravation of working with them anymore now that the trust has gone, can they withhold that DL money from me and what would I need to do to call in that loan should I decide to quit.
I would really like to go back to working on my own again and take the clientbase that I initially brought with me. Can they stop me doing this? I would quite happily resign and give back my share in return for those clients along with a few essential items, notebook PC etc, repayment of my directors loan in full, my share of profits the company has made to date and release from any other financial obligations. Is this unreasonable? What's the best way of going about this? Or should I be doing the above and trying to get a settlement for my share as decided by 3rd party?
Sorry for the length of this post, thanks for your time.
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