Dissolving a Ltd company and starting again under the same name

[dotcomdude]

My priority is to keep a good relationship with the manufacturer as I have paid them a significant amount of money and do not want to let them down after years of hard work both sides. Hence, wanting to continue with the same product.

May be worth having a read of this. If you follow your original plan, your minority shareholder will almost certainly have a claim against you for prejudice. This could mean that all future work you put in to the project - and a proportion of any profits - could be at risk.

Far better to sort it out within the original company. Offer to buy him out, or to sell your shares to him (which he won't want). Tell him that's the only way there will be any future profits for anyone.

I've walked away from a couple of significant projects because there was a partner involved where we couldn't break a deadlock. It's not worth trying to get around it in a backhand way...

 

[FlorenceSapphire]

Thank you for your reply and the link. I have just read this and I really don't want to go about things a backhanded way. I have been nothing but honest in the 5 years since we started this venture, unlike the other Director. I could offer to buy his shares, only, as stated previously, I have run out of cash. Can I offer to buy them at a later date once the company starts selling the product (when I have saved enough money to pay the manufacturer). As 80% shareholder can I remove him as Director for breach of contract amongst other points? My shares wouldn't be of value to him as I am the sole producer in the venture. He wishes to meet me face-to-face, however this would put me at risk as he is a nasty piece of work. Are there ways around resolution without meeting face-to-face?

 

[SteveHa]

You are really in the wrong place asking on a forum for this. If the company has engaged accountants, start with them. If not, it may be an opportune time to do so.

As previous respondents have highlighted, you are a separate entity to the company. Any funds you have injected are a debt from the company to you. If you close the company down, you effectively sacrifice that debt, such that you can't recover it.

If there are no other creditors you could, potentially, take the IP in lieu of the debt, but this would need to be properly documented, probably with legal advice underpinning the transaction.

However, at the moment the minority shareholder does still own a share of the company and would probably need to approve the above.

You can't handle this by yourself in an ad-hoc fashion. It needs to be professionally resolved.

 

[FlorenceSapphire]

You are really in the wrong place asking on a forum for this. If the company has engaged accountants, start with them. If not, it may be an opportune time to do so.

As previous respondents have highlighted, you are a separate entity to the company. Any funds you have injected are a debt from the company to you. If you close the company down, you effectively sacrifice that debt, such that you can't recover it.

If there are no other creditors you could, potentially, take the IP in lieu of the debt, but this would need to be properly documented, probably with legal advice underpinning the transaction.

However, at the moment the minority shareholder does still own a share of the company and would probably need to approve the above.

You can't handle this by yourself in an ad-hoc fashion. It needs to be professionally resolved.

Thank you for your reply. I have spoken to 10 lawyers so far about the case, of which all have said I have strong grounds to sue for damages. They have all quoted me a fee of £450+ per hour for representation. I do not have cash to cover these fees as I have spent all of my savings on the business.

My accountant has also not been doing a correct job with my bookkeeping, and therefore I do not trust him to take care of this case well. Am I stuck between a rock and a hard place? Can anyone recommend a legal service that would be open to helping me? Legal Aid is not an option for company litigation.

 

[Mr D]

Thank you for your reply. I have spoken to 10 lawyers so far about the case, of which all have said I have strong grounds to sue for damages. They have all quoted me a fee of £450+ per hour for representation. I do not have cash to cover these fees as I have spent all of my savings on the business.

My accountant has also not been doing a correct job with my bookkeeping, and therefore I do not trust him to take care of this case well. Am I stuck between a rock and a hard place? Can anyone recommend a legal service that would be open to helping me? Legal Aid is not an option for company litigation.

Yes lawyers can tout for business. Does not mean you will win or that you can recover much if any money.

Or you could simply have the company start proceedings to recover money you can prove the other shareholder owes the company.

 

[Mr D]

Thank you for your reply. So am I within my rights to dissolve the company on the grounds that we have run out of cash? Register a Newco and purchase the assets at a later date? Or do I need to purchase the assets before dissolving the Oldco. I do not want to be in any unlawful situation, only I can not continue with the current setup. Taking all emotions aside, the other Director is a dishonest bully and wishes to meet with me in person to discuss 'when we are re-couping our investment' (he still owes the business cash investment of several thousand).

Who could you purchase assets from? If you dissolve the company its common for assets to transfer to a new owner, the crown.
If company remains open then you purchase the assets from oldco and then distribute the money oldco has.
Of which the other shareholder owns 20%.

Oh and you purchase the assets at a fair price.

 

[dotcomdude]

Can I offer to buy them at a later date once the company starts selling the product

Yes, but until you get his shares he still owns 20%. If he will go for it, get him to lend you the money to buy his shares, so you just owe him the money later on (but you get the shares now). He's very unlikely to go for this!

As 80% shareholder can I remove him as Director for breach of contract amongst other points?

Yes, but this doesn't affect his shareholding.

Do you have a friend that is also a friend of his, that could mediate for you? Sounds like you need someone in the middle, without having to resort to expensive solicitors/lawyers...

 

[FlorenceSapphire]

Yes, but until you get his shares he still owns 20%. If he will go for it, get him to lend you the money to buy his shares, so you just owe him the money later on (but you get the shares now). He's very unlikely to go for this!



Yes, but this doesn't affect his shareholding.

Do you have a friend that is also a friend of his, that could mediate for you? Sounds like you need someone in the middle, without having to resort to expensive solicitors/lawyers...

I will have a think about who could mediate. I seems my options are to proceed with demand for payment.
Offer to buy his shares, at a later date once the company is in profit or receiving revenue.
Take him off the board.
Sue for breach of contract.
Are their other options?

 

[Mr D]

I will have a think about who could mediate. I seems my options are to proceed with demand for payment.
Offer to buy his shares, at a later date once the company is in profit or receiving revenue.
Take him off the board.
Sue for breach of contract.
Are their other options?

Just remember that as a shareholder he also has some power too. Push him and he can push back in other ways. What would you do if every year the other shareholder requested an audit for example?

https://www.netlawman.co.uk/ia/shareholders-rights

Rights of all shareholders, regardless of percentage of shares held
Information rights

• to inspect the register of members and the index of members' names without charge
  
  
• to be given a copy of the register of shareholders within 10 days of a request (possibly subject to a charge)
  
  
• to inspect the register of directors’ service contracts without charge
  
  
• to receive a copy of the annual accounts
  
  
• to inspect the minutes of any general meeting
  

Meetings

• to ask the court to call a general meeting
  
  
• to receive notice of general meetings
  
  
• to vote at a meeting of members
  

Other

• not to be unfairly prejudiced
  
  
• to be given a share certificate
  
  
• to have the shareholder’s name entered on the Register of Members
  
  
• to have the company wound up, provided that it is just and equitable to do so
  

Rights of shareholders holding more than 5% of shares
Meetings

• to call a general meeting
  
  
• to refuse to consent to a meeting being held at short notice
  

Other

• to circulate a written statement on any matter to the other members
  

Rights of shareholders holding more than 10% of shares

• to have the Company's Annual Accounts audited
  

 

[Newchodge]

Taking all emotions aside, the other Director is a dishonest bully

I would hate to see your comments when you are being emotional.

 

[FlorenceSapphire]

I would hate to see your comments when you are being emotional.

These types of comments are not necessary with such delicate matters being discussed. Please keep your comments to yourself unless they are constructive.

 

[FlorenceSapphire]

Thank you for your reply and outlining the above. Is this helpful is solving these issues I am facing? I am after real concrete solutions. He could very well have access to all of these points, and I have always been honest and open to the above. All information is available on Companies House and all share certificates have been issued.

 

[Mr D]

Thank you for your reply and outlining the above. Is this helpful is solving these issues I am facing? I am after real concrete solutions. He could very well have access to all of these points, and I have always been honest and open to the above. All information is available on Companies House and all share certificates have been issued.

Just saying be careful. You can take action against him and he can take action against you.
Best would be amicable but sounds like the two of you have gone a considerable distance down the amicable route already without resolution.

 

[FlorenceSapphire]

Just saying be careful. You can take action against him and he can take action against you.
Best would be amicable but sounds like the two of you have gone a considerable distance down the amicable route already without resolution.

Yes, I will be careful. Indeed, ideally it would be dealt with amicably. But I simply can not trust him or his word when he has failed to make agreed payments putting me at risk financially. This is a person who claims to have no money to pay the outstanding amount, yet takes lavish holidays every two months, meals out everyday and has just moved into a luxury property in the most expensive area in the city.