Advice regarding directors loan

[Yuiop]

Myself and another person set up a Ltd company. Just us two as directors. We both invested 35,000 to convert premises to enable us to begin trading. Hit loads of problems which were unforseen. Ran out of money. Other director was prepared to take additional personal borrowing to continue with the business to get ut off the ground and start trading. I wasn't.

I resigned as director genuinely believing that the business had no chance of starting trading.

The business did open, and months later I received a letter asking me to transfer my 50% of shares over to the remaining director.

Am I entitled to be repaid my investment? I suspect director will try to claim no profit is being made. Is legal assistance in order to achieve this going to cost me an excessive amount?

 

[Adam93]

Did you have a loan agreement with the company? If you did, all the terms will be in there.

If no loan agreement, then you'll have to negotiate.

You are under no obligation to transfer the shares unless you have a shareholders agreement/articles that states something to the contrary.

 

[Mr D]

You resigned as a director, you remain as a shareholder and entitled to 50% of the dividends.
However the director does not have to issue dividends and business may take a while to become profitable.

You could negotiate to sell the shares to other shareholder. At a mutually agreed price.

 

[Lisa Thomas]

Understand that directorship and shareholding are completely different.

How was the £35k treated? As a loan, as a capital injection?

Is the Company solvent?

 

[Mark T Jones]

What does your shareholder agreement say?

only joking. You were friends so don’t need one of those

Seriously, consider they questions above - they might well be crucial to the overall answer

tgat said, you are in a reasonably strong position as you own the shares that they want. In the absence of other agreements it is for you to negotiate the terms of sale - which presumably would cover your cash contribution