Directors and investors

[nigel2008]

An investor takes a shareholding of 20% in a new limited company. The investor has a copy of the new companies business plan itemising proposed activities and their costs.

There are no other investors.

One director has the other 80% of the shares

Can the directors do as they like with the investors money or do they have to ask the shareholders permission?

Thanks.

N

 

[Scalloway]

Theoretically they can do what they like but it will depend on what agreements were signed with the new investor.

 

[Chris Ashdown]

Shareholders invest in the company, but that's the limit of there activity in the day to day running of the company, Directors who may or may not be shareholders are solely responsible for the running of the company but can be answerable to shareholders at general meetings where shareholders can vote them off the board if they have the majority vote based on share numbers

 

[obscure]

Can the directors do as they like with the investors money or do they have to ask the shareholders permission?

What does it say in the terms of the investment agreement?

 

[The Resolver]

Whilst I agree fully with Scalloway and Chris, its worth saying that If the business plan was shown as a representation to attract the investment, then any significant change May expose you to a claim for misrepresentation.