Business partner taking money.

[Wheresgavin]

Hi there, I didn't think I would find myself writing this especially on a public forum but I thought I would try before going elsewhere.

I started a business with a friend I worked with before. It is a body shop and we started off small and have grown little by little for the last two years.

My partner has had a few issues which came to light in December which turned out to be addiction. I knew something was happening when jobs were not going out with the same high standard we were doing before. Falling asleep at meetings and turning up drunk and late became common. When he did eventually come clean about what was happening I understood and drew a line under at as he was telling me he was going to addiction meetings.

Fast forward to last week. I have a look at the phone bills for the business. They are weirdly high. I delved deeper and called the mobile phone company for more details it turns out you can transfer money into casino or gambling websites via your mobile phone bill using a 3rd party app. I then had a look at the bank statements to check his personal phone bill which also come off the business account. Also stupidly high. At this point I'd like to point out I do not have control over any of the online banking which we use to pay ourselves and some suppliers.

Having checked the phone bills it encouraged me to check what else might be going on and it turns out there has been money moving into his bank account for the last two months mainly but more frequently than it should. I confirmed with the bank over the phone it was actually his personal bank account.

In January and February alone there has been £4000 moved into his bank account in small increments ranging from £10 - £70. The phone bills amount to just over £1000 since September of last year. So £5000+ in total.

I have a meeting with the accountant tomorrow to discuss these matters further, he doesn't know that I know this information yet. I'm just looking for some advice really as to where I would stand in all of this.

Come the end of March I'm asking him to move on and I plan to take the business forwards alone. We are 50/50 in this so it would require him volunterally leaving and signing it over. He is a stubborn person and gets defensive it may not go smoothly but I would like to know is there any legal stand point I would have to move him on. In my eyes it's over, the trust is gone he has been stealing from the business which is essentially stealing from me and then being sneaky with betting through the mobile phones.

He is still my friend and I would like to see him get better however he has put me in this position and I cant see a way back from that.

Apologies for the length

 

[kulture]

First, what is the legal set up. Is it a partnership or a company?

 

[Wheresgavin]

First, what is the legal set up. Is it a partnership or a company?

It's a limited company 50/50 share.

 

[Mr D]

OK so you are both directors?
And you say both shareholders.

Those 2 are separate. He can resign as a director and remain a shareholder, entitled to vote at shareholder meetings, demand audits, get dividends etc.
Unless you buy the shares from him at a mutually agreed price?

I'm guessing from what you have typed that you don't have a shareholder agreement?

Just out of interest, as a director why do you not have any control over the bank account online?

 

[Wheresgavin]

OK so you are both directors?
And you say both shareholders.

Those 2 are separate. He can resign as a director and remain a shareholder, entitled to vote at shareholder meetings, demand audits, get dividends etc.
Unless you buy the shares from him at a mutually agreed price?

I'm guessing from what you have typed that you don't have a shareholder agreement?

Just out of interest, as a director why do you not have any control over the bank account online?

There is no shareholder agreement no. We are both directors. I do have control per se, I'm on the mandate and can speak to them no problem however with the banking app and online banking he was the main user, it was a way of giving each other specific jobs to do and that was one of his. To pay suppliers and transfer money whenever needed. I have thought about going down the pay off route to be honest I'm hugely pissed off he's put me and the company in this position and quite frankly would like to offer little to nothing, probably unrealistic and I would likely be subtracting whatever the exact figure is he has spent.

 

[obscure]

The money doesn't belong to them or you, it belongs to the company. Unless it's removal was properly accounted for what they have done is embezzle money, which is a crime. They may prefer to depart without trouble rather than have to pay back the money/face a legal suit from the company.