As a director of a company, should I be able to access the company bank account?

[TerryJ]

I setup a business with a former colleague of mine who originally formed a ltd company. He is the managing director and at a later date I was subsequently registered as a director.
My colleague setup a bank account for the company and as yet I am not registered to the bank account.

Only he has access to the bank account. For reasons I wont go into, I believe he may intending to dissapear off with our profits.

What I would like find out, is where do I stand in terms of being able to access the company account. Do I have any right to access the company account as a director of the company without involving him.
If not, do I have any legal rights or protection, or any way to stop such a situation such as him emptying the account and disappearing? I posted this in the legal section, re the legal aspects, but want to understand the bank account side of things.

Any help appreciated.

 

[traxor]

The treasurer should be the only person who is able to access the business bank account, it would be unsafe for all directors to have control over the bank account as you're at risk of losing money.

 

[stugster]

As a director, it is your responsibility to make sure that your accounts are correct and submitted on time to Companies House. As a result, I'd suggest that the only way for you to know they are accurate/correct is by being able to cross reference them with the bank statements.

If you haven't got access to the bank account information, you wouldn't be able to verify the accounts reflect the real state of affairs of the business. You may be held liable if things were to be questioned later on.

 

[elaine@cheapaccounting]

Regardless of the rights of access to the bank account or not may I suggest that he have to trust someone you are in business in 100%.

If you don't then I would question if this business will work.

Are you just a director or a share holder as well?

 

[TerryJ]

Thanks for all the replies.

Elainec100

I am a director but not a shareholder, the company was only setup a year ago and there are only two of us.
I do appreciate you need to trust someone 100%, however in my case its case that the person I have gone into business with is not as strait laced as I might have thought at the start of the venture.

Stugster,

I dont have access to the bank accounts or statements, so I have no way of checking.

Could he dissolve the company and walk away and disappear with the money in this situation?

 

[Anna Chandley]

Terry

If you are not a shareholder then you have no rights to the profits generated by the company. Your only method of withdrawing money from the company would be via a salary.

If the other director owns 100% of the shares then he has complete control over what happsns to the company.

Anna

 

[TerryJ]

Thanks Anna,

Nothing was done in terms of allocating any shares, so I presume he has 100% of the shares.

The only thing that was done was that I was registered to companies house as a director.

Are shares allocated automatically to the first person who registers the company?

 

[elaine@cheapaccounting]

In this situation as the directorship is a title only (assuming this has been registered as companies house) you should still be aware of your responsibilities.

May I suggest that you might want to consider being a director in title only and become a straight forward employee!

 

[elaine@cheapaccounting]

Thanks Anna,

Nothing was done in terms of allocating any shares, so I presume he has 100% of the shares.

The only thing that was done was that I was registered to companies house as a director.

Are shares allocated automatically to the first person who registers the company?

No they are auto allocated.

I would suggest reviewing the companies house record to see what's what here:

http://wck2.companieshouse.gov.uk/94a1696e64f55b6b736e27f739ed9238/wcframe?name=accessCompanyInfo

go to order information on the company

 

[TerryJ]

No they are auto allocated.

I would suggest reviewing the companies house record to see what's what here:



go to order information on the company

The problem I have is that the company accounts have not been filed yet, so Im guessing there will be little to see?


In regards to your previous post. I am registered as a director at companies house. There are only two directors him and me. He registered the company and the company bank account is in his name and I have no access to that or any statements, nor do I take a salary.

When you say rather than be a director become an employee, how would that benefit me?

 

[frauke]

No they are auto allocated.

I would suggest reviewing the companies house record to see what's what here:

http://wck2.companieshouse.gov.uk/94a1696e64f55b6b736e27f739ed9238/wcframe?name=accessCompanyInfo

go to order information on the company

If you do as Elaine says you can confirm that you are still registered as company director. Also get a copy of the Memorandum and articles of association. That explains the rules of how the company is run, the number of shares issued when the company was formed, and details of any shares allocated at that time. If the company was formed more than 12 months ago, there also should be copy of the first annual return. This will have the details of all directors and shareholders.

If you really are a director of the company you have the right to go to the bank and arrange to be included on the bank account, etc. The bank may or may not inform the other director. If the bank was aware you are a director they would expect the company to let them know, even if you don't subsequently become a signatory on the account.

 

[elaine@cheapaccounting]

The problem I have is that the company accounts have not been filed yet, so Im guessing there will be little to see?


In regards to your previous post. I am registered as a director at companies house. There are only two directors him and me. He registered the company and the company bank account is in his name and I have no access to that or any statements, nor do I take a salary.

When you say rather than be a director become an employee, how would that benefit me?

Lots can be found out as companies house.

With all due respect if you are not taking a salary and are not a shareholder - what benefit are you receiving from your involvement in the company. Simply put - I think I am confused as to why you are a director.

Seems to be you have all the directors responsibilities but with no reward.

I am sure that I have missed something though.

 

[TerryJ]

Lots can be found out as companies house.

With all due respect if you are not taking a salary and are not a shareholder - what benefit are you receiving from your involvement in the company. Simply put - I think I am confused as to why you are a director.

Seems to be you have all the directors responsibilities but with no reward.

I am sure that I have missed something though.

Really apreciate the help everyone has provided here.

Elainec100, yes I'm sure my situation does sound a bit confusing, basically we started the business as a sideline to our fulltime careers. Both of us were employed in fairly well paid positions, and neither of us took any any kind of salary or any money out of the company( Although it was agreed (verbally) that should take anything out, profits would be split 50/50).
It was agreed that we would keep the money in the bank as we were working towards some bigger projects which would need some capital to invest.
Financially I had no need to take a salary, and presumed (stupidly on my part) that come the time that we had enough business coming in, we would move over to working for the company full time and I could take a salary.
However the reality is that my "business partner" has no intention of involving me in anything nor even communicating with me.
To summarise, I have been very trusting in a person with whom I shouldnt have been.

Frauke

I dont have any shares, I am just a registered director at companies house.
When you say I have a right to arrange to be included on the bank account, wouldnt my business "partner" who is the company bank account signatory not have to agree to this?

 

[elaine@cheapaccounting]

If the profit were to be split 50:50 then it would imply either an agreement to be out in place for this to be paid as a salary / bonus or that you would be a 50% shareholder to receive dividends.

Yes the other director would need to authorise you as a bank signatory.

Not sure where you go from here as you seem to have neither but good luck.

 

[Homshaw]

Have a friend who had a shop. A guy walked in one day said I could transform your business. He was the director the other guy looked after the business and the bank accounts.

The other guy is now serving 7 years for fraud from a different business. My friend is left with £100K in debt and will go bankrupt when he can afford the fee.

What's the problem with seeing the bank account? I would neither sign or guarantee anything and would resign ASAP

 

[frauke]

Really apreciate the help everyone has provided here.

When you say I have a right to arrange to be included on the bank account, wouldnt my business "partner" who is the company bank account signatory not have to agree to this?

I always thought so, until I was recently informed by HSBC, that a director of a company had a automatic to right to be included on a Company bank account and they (HSBC) did not have to consult the other directors to accept them....

Having had difficulties changing signatories when directors resigned and new directors have been appointed over the years, I did find it hard to believe! But having just said this I know it happens. (And it was with HSBC!), 2 directors where able to arrange a mortgage in the name of the company on a property owned by the Company without the knowledge of a 3rd director. The 3rd director had years earlier given the bank "a directors personal guarentee", so when he found out, he resigned, sending a copy of his resignation to the bank. The bank was then forced to release his directors guarentees, as he was no longer a director of the company.

 

[TerryJ]

I always thought so, until I was recently informed by HSBC, that a director of a company had a automatic to right to be included on a Company bank account and they (HSBC) did not have to consult the other directors to accept them....

Having had difficulties changing signatories when directors resigned and new directors have been appointed over the years, I did find it hard to believe! But having just said this I know it happens. (And it was with HSBC!), 2 directors where able to arrange a mortgage in the name of the company on a property owned by the Company without the knowledge of a 3rd director. The 3rd director had years earlier given the bank "a directors personal guarentee", so when he found out, he resigned, sending a copy of his resignation to the bank. The bank was then forced to release his directors guarentees, as he was no longer a director of the company.

Thats very interesting. I suppose I could contact the bank, and ask them.
In the situation you outlined were the directors shareholders or directors without shareholdings, does that make any difference as far as the bank is concerned?

Being a director with no shareholding, I would be concerned they might say well you can see the accounts, but you cant have access, and then notify my partner of this. In turn he decides to carry out his intentions.

On the flip side, whilst having access to the bank account would give me some level of security. What can I do to protect my share of the funds? I am presuming as a non shareholder, with only verbal and emails to say we would share the funds 50/50. I would not have any right to withdraw my half of the funds?