Business sold without director/shareholders knowledge

[Pnynthmclb]

Odd this one .... The mother in law has been a major shareholder and director of a ltd Company for several years despite being quite elderly, this is also odd as she has no understanding of the business and this has seemed to be set up by the son . The son has recently passed away so leaving the mum in sole control . We as a family has spoken to the sons wife advising that she will be resigning as director as the family feels this has been done as coercion and shouldnt take responsibility for a company that offers all the risk but no benefits . We got the mum in law to resign as director using the correct form downloaded from companies house .

We now learn that the wife of the son was to be the new director, but advises that she has sold the business to one of the employees and companies house shows the new person as being the new director, we have challenged this as a family and the story changes yet again, but still the new director shows at companies house . Whilst we are aware the mum in law is still responsible to the company for another six months what is the legal situation in this case as we have learnt the transfer of directorship was undertaken verbally and no contract exists and was not aware of the transfer ? From my understanding the mum in law could veto this or challenge the new directorship as it would seem she is the majority shareholder ie 75% or more ..... but to be honest just would like to see this company and its responsibilities out of the family once and for all ...... any suggestions and what is the legal standing on this please ...kind regards

 

[Newchodge]

See a lawyer who understands commercial law. While you don't understand the difference between a director and a shareholder you do not have any chance whatsoever of dealing with this.

 

[Ian J]

From my understanding the mum in law could veto this or challenge the new directorship as it would seem she is the majority shareholder ie 75% or more

If your mother in law is the majority shareholder no-one can sell the company without her permission

 

[Mark T Jones]

As @Newchodge has said, you appear to be confusing directorship with ownership.

My reading of the situation is that she has appointed a new director, which might well be a good decision (but we have nowhere near enough information to comment) - whist shareholding might well be unchanged.

 

[Clinton]

...... any suggestions and what is the legal standing on this please ...kind regards

Forums are great for all kinds of casual conversations, speculation, exchange of nonsense.

If you want legal advice the smart thing to do is to go hire a competent lawyer.

Yes, that costs money. The only thing more expensive than a good lawyer ... is acting on free advice.

Talk to @The Resolver or drop me a note and I can recommend a good lawyer or two.

 

[AllUpHere]

As others have said, you aren't capable of helping her with this. Get professional advice.

Based on the info we have, her resigning as a director could have been the best possible thing to do. It could also have been the worst possible thing to do. There is no way of telling.

 

[Pnynthmclb]

As @Newchodge has said, you appear to be confusing directorship with ownership.

My reading of the situation is that she has appointed a new director, which might well be a good decision (but we have nowhere near enough information to comment) - whist shareholding might well be unchanged.

Thank you for at least giving a constructive polite reply to my enquiry ... this is the first posting I have made here and to be honest felt the criticism of some members quite unnecessary and unhelpful .
Whilst we all may not be an expert in everything this is what I thought forums were for to gain extra insight, rather than be criticised.
I still stand by my posting and I quote ........."The interesting thing, however, is that the same person can be both a shareholder and director. This means that you can set up and manage a limited company on your own, because you only need one shareholder and one director to form a company"

In this instance this is what has happened with the mum fronting the company for the son, ( even though she wasn't aware she was in this situation ) so she is indeed the majority shareholder and director also .

Going back to my initial enquiry what I was anticipating was an overview as to what can be done, if it is found that the company has been sold with out the director being aware .... ie is it a criminal act ? Who should be notified ? Is it fraud ? I have tried to speak with companies house, but they dont seem to be able to offer any advice on this matter ... hence the basic posting ....kind regards

 

[Mark T Jones]

Thank you for at least giving a constructive polite reply to my enquiry ... this is the first posting I have made here and to be honest felt the criticism of some members quite unnecessary and unhelpful .
Whilst we all may not be an expert in everything this is what I thought forums were for to gain extra insight, rather than be criticised.
I still stand by my posting and I quote ........."The interesting thing, however, is that the same person can be both a shareholder and director. This means that you can set up and manage a limited company on your own, because you only need one shareholder and one director to form a company"

In this instance this is what has happened with the mum fronting the company for the son, ( even though she wasn't aware she was in this situation ) so she is indeed the majority shareholder and director also .

Going back to my initial enquiry what I was anticipating was an overview as to what can be done, if it is found that the company has been sold with out the director being aware .... ie is it a criminal act ? Who should be notified ? Is it fraud ? I have tried to speak with companies house, but they dont seem to be able to offer any advice on this matter ... hence the basic posting ....kind regards

You need to understand what has actually been sold / bought - does it appear to be some of the shares, all of the shares or simply the assets of the business?

These things will fundamentally affect the answer.

Is there a shareholders' agreement in place?

 

[Newchodge]

The director does not have to be aware that the company has been sold. The SHAREHOLDERS own the shares in the company. Their shares cannot possibly be sold without their knowledge. So the company had not been sold. The fact that you do not understand this fundamental fact is a very clear indicator that you, or, more accurately, your mother in law, need professional help in dealing with this.

 

[Clinton]

The director does not have to be aware that the company has been sold.

Er, you sure about this?

 

[SteveHa]

The business can't be sold as a discreet item. The shareholders own the shares in the business. Whilst individual assets can be sold, the business itself still belongs to the shareholder(s). Assets should not be sold without shareholder agreement, and if someone with no authority to make the sale has done so, then they are guilty of dealing in stolen property.

Nevertheless, as others have said (and you appear to have taken some offence at) this can get complex and messy, and you really do need the assistance of a professional to ensure that procedures are followed, all options explored, and Is dotted & Ts crossed. This is not an insult, but rather good, sensible advice.

 

[Mr D]

Going back to my initial enquiry what I was anticipating was an overview as to what can be done, if it is found that the company has been sold with out the director being aware .... ie is it a criminal act ? Who should be notified ? Is it fraud ? I have tried to speak with companies house, but they dont seem to be able to offer any advice on this matter ... hence the basic posting ....kind regards

First someone needs to figure out if anything has been sold, and if so, what.

As Mark says the answer makes all the difference.

This really should be in the hands of a commercial solicitor.

 

[WaveJumper]

Odd this one .... The mother in law has been a major shareholder and director of a ltd Company for several years despite being very elderly, this is also odd as she has no understanding of the business and this has seemed to be set up by the son . The son has recently passed away so leaving the mum in sole control . We as a family has spoken to the sons wife advising that she will be resigning as director as the family feels this has been done as coercion and shouldnt take responsibility for a company that offers all the risk but no benefits . We got the mum in law to resign as director using the correct form downloaded from companies house .

We now learn that the wife of the son was to be the new director, but advises that she has sold the business to one of the employees and companies house shows the new person as being the new director, we have challenged this as a family and the story changes yet again, but still the new director shows at companies house . Whilst we are aware the mum in law is still responsible to the company for another six months what is the legal situation in this case as we have learnt the transfer of directorship was undertaken verbally and no contract exists and was not aware of the transfer ? From my understanding the mum in law could veto this or challenge the new directorship as it would seem she is the majority shareholder ie 75% or more ..... but to be honest just would like to see this company and its responsibilities out of the family once and for all ...... any suggestions and what is the legal standing on this please ...kind regards

Pnynthmclb, as others have pointed out its very difficult for anyone to give a definitive answer based on the facts in your post, suffice to say just taking it at face value if the mother in law was a majority shareholder of 75% in the company she would need to be party to anything 'going on'. Is it perhaps a case that the deceased sons wife has sold her share holding?

And whats the significance of your mother only 'being responsible for another six months'

Lots of alarms bells are ringing; Was his wife left the shares in a will, has probate taken place, what does it say in the share holders agreement there's so many things here which need to be addressed and looked at. You really need to follow the advice given above and obtain proper legal help.

I will leave with one last thought, from personal experience if (and a very big if) you suddenly find yourself for some reason in a protracted long term battle it might be wise to make sure someone has power of attorney over the mother in law's affairs.

I wish you the best of luck

 

[Pnynthmclb]

The business can't be sold as a discreet item. The shareholders own the shares in the business. Whilst individual assets can be sold, the business itself still belongs to the shareholder(s). Assets should not be sold without shareholder agreement, and if someone with no authority to make the sale has done so, then they are guilty of dealing in stolen property.

Nevertheless, as others have said (and you appear to have taken some offence at) this can get complex and messy, and you really do need the assistance of a professional to ensure that procedures are followed, all options explored, and Is dotted & Ts crossed. This is not an insult, but rather good, sensible advice.

Thank you for this information, this is all that I wanted as an overview from the from the posting .....Kind regards

 

[Chris Ashdown]

I am sure that if you ask the forum , somebody will check companies house to see if your mother still ownes the shares, of if they were transferred some time ago and who presently ownes them prior to it being sold

There may well have been transfered by the son at a earlier date by the son, who by the looks of it was just using your mothers name to hide him from being seen as the owner