Director dispute

[MrAB]

Hello,

I'm in a disputre with my fellow director (50:50 shareholders) and we have been emailing recently.

He sent me an email containing the following line:

....I therefore cannot understand why you don't just resign your directorship
of the company if it is causing you so much stress.
You can still keep your shares but have no dealings with the running of
the business.
Alternatively if you want a complete break from it then of course there
is the option of 'selling' your shares.

I wrote a couple of days later:

"I’ve been reflecting over the weekend on what you have said in your emails and am keen that we should try and find a resolution. For me, common sense should prevail so we should try to solve this informally so that we can go our separate ways while we are still solvent and with enough time to make the changes necessary to ensure success.

With that in mind, I understand that I should come to you first if I want to sell my shares. Therefore, I need to ask you what valuation you place on the business with a view to you buying me out."

I did send a further email to clarify that I wouldn't resign before selling my shares but have I given myself a problem here?

Based on this text, can he remove me at companies house?

 

[Elemental CoSec]

In a word, no.

 

[MrAB]

Thanks! Wasn't sure if that by inviting the offer to by my shares I might have inadvertently implied my resignation too.

 

[Elemental CoSec]

Glad I could be of help.

Being a shareholder and being a director are independent matters and, in any event, from what you've posted, you haven't agreed to sell your shares. All you have done is ask him the value that he would put on it.

By the way, we specialise in corporate law advice and share sales, so if you want some legal advice or drafting on the sale of your shares, please feel free to get in touch. You can contact us using the details here http://www.elementalcosec.com/contact-us/

 

[MrAB]

That's really helpful. Thank you. I'll save the link.

 

[The Resolver]

Forgive me for saying so but the first mistake was to invite him to say how much he would pay for your shares. Far better to say you would be prepared to buy his shares and ask him for his price, which of course is likely to be at a higher value per-share than what you pay for yours.

Another tactic is to see if there's someone you know who might be prepared to buy your shares at a price acceptable to you. It is most likely under the articles of association or shareholders agreement that you would then have to give notice to your co-shareholder giving him the option to buy the shares at the same price.

As ElementalCoSec says you have not committed yourself. One thing you must not do at this stage is to resign you're directorship. That instantly puts you at a disadvantage in obtaining key information about the finances of the company. I'd make sure you have all the accounting and sales and purchase information before you resign.

As with any negotiation, it is far better to focus on looking at it from the perspective of the other party and start influencing his view of the matter so he becomes far more motivated to want to acquire your shares then may presently be the case. The tactics here include being difficult, making it clear that if you retain your shares as you're entitled to he would effectively be working for your benefit, and making it clear that if you didn't retain your shares you are fully knowledgeable of your rights as a shareholder. In other words make him feel that he gains in many ways by getting rid of you beyond simply the value of the shares.

One final word of warning. Check carefully the articles of association and any shareholders agreement to make sure that if you do resign your directorship, that you're not then forced to offer up your shirts to him

 

[Grayson Moore]

Do not resign as a director without first taking proper advice both from a legal position and from a tax standpoint. You may inadvertantly have an impact on any entitlement to any entrepreneurs relief.

 

[loz2012]

Forgive me as a newby on this forum, but I am in similar situation to MrAB.

I set up a LTD company 2 months ago with 3 other members and we all have an equal share of the company at 25% each and are all directors. Due to personality conflicts, the remaining directors are wanting to buy my share of the company.

My question is, which is in two parts.

No.1 They are asking me to give them a price to buy my share. I want to ask for my original investment back, but I have a feeling they will not accept this offer, due to the company only trading for a short while.

What procedure do I need to take enforce them to pay my original investment.

No. 2. As directors, we have all been responsible for purchasing stock, equipment, fixtures and fittings from day 1, using our individual investemnt. What rights, if any, do I have to remove items purchased by myself on behalf of the company.

Im really trying to explain this a simple as I can without writing an essay. Hope someone can shed some light, as they wish to call a directors meeting tomorrow morning, to discuss my involvement and share within in the company.

Thanks

 

[Anna Chandley]

No.1 They are asking me to give them a price to buy my share. I want to ask for my original investment back, but I have a feeling they will not accept this offer, due to the company only trading for a short while.

What procedure do I need to take enforce them to pay my original investment.

Unless there is a procedure set out for valuing the shares in the shareholders agreement or articles of association then this is a matter for negotiation between you and the other directors. In the abscence of any agreed procedures you cannot force them to buy your shares for the price you originally paid.

No. 2. As directors, we have all been responsible for purchasing stock, equipment, fixtures and fittings from day 1, using our individual investemnt. What rights, if any, do I have to remove items purchased by myself on behalf of the company.

These items belong to the company so you have no right to remove any of them.

Anna