Dividends withheld without waiver

[TurnerW]

Long story, try and keep it short. I worked for a company for 12 years and was granted 10% share in the business.
I was never made director. around 9 years ago I started a new venture and was employed back to the business as a contractor consultant (still retained shares) I was taken off the payroll and invoiced 50% for time from my new company and 50% paid in Dividend. Around 2020 the dividend stopped as the company wasn't making a profit I adjusted my invoice to compensate.
This year I can see from the end of year accounts a Dividend has been paid, but nothing to me. And its a lot, way more than my total invoice value let alone 50%.
There is a shareholders agreement. It does not state that upon leaving you have to hand shares back. It does not really talk about dividends at all.

Can the remaining Director and shareholder who has the rest of the shares do this legally? I plan to have a conversation with them about this, but want to know where I stand first, as everything else is on amicable terms. The company is audited so I guess they'll be looking for proof I waived my dividend, which of course they won't have.

Anyone know where I stand on this?

Thanks

T

 

[fisicx]

Can the remaining Director and shareholder who has the rest of the shares do this legally?

No. Dividends must be paid to all shareholders in accordance with company documents.

 

[DontAsk]

It depends if you have the same class of shares or whether your share class benefits from the same dividend payments.

 

[TurnerW]

It depends if you have the same class of shares or whether your share class benefits from the same dividend payments.

All shares are ordinary according to companies house

 

[fisicx]

All shares are ordinary according to companies house

In that case you are entitled to your dividends. Write to them pointing out their obligations. Their response may require legal action.

 

[MikeJ]

From their perspective, you exchanged dividends for a higher invoice value. It does seem like you want to have your cake and eat it.

 

[Lisa Thomas]

From their perspective, you exchanged dividends for a higher invoice value. It does seem like you want to have your cake and eat it.

Well spotted, I now see OP said they adjusted their invoice to allow for the lack of dividends...

 

[fisicx]

From their perspective, you exchanged dividends for a higher invoice value. It does seem like you want to have your cake and eat it.

That's not how I read it. They just got paid more. It's not connected to dividend payments.

They hold 10% shares and get dividends.
They are also a contractor and get paid accordingly.

If they contracted elsewhere they would still get dividends. I suspect the Directors don't understand how these things work.

 

[TurnerW]

Well spotted, I now see OP said they adjusted their invoice to allow for the lack of dividends...

please don't think the worst by default. Imagine I was paid £1000 per month via PAYE. Then I got the shares and and paid £500 via PAYE and £500 by divi. When I changed to contractor the PAYE changed to Invoice, so £500 + £500. Imagine the Divi stopped and I increased my invoice to £1000. All fair. Then the company has paid a DIVI where I'm due £20k. even if I take my £6k off (invoice at £500 per month) There is still £14k difference. The question is can they legally with hold it. I'm happy to knock off the £6k I could just issue a credit note for that (pay it back so the vat is straight) and then get paid the £20k divi, this is what I suspect they are trying to dodge.

 

[DontAsk]

Have you (even unknowingly) signed a dividend waiver? If not, you are entitled to the dividends, regadless of what you are paid as an employee or contractor.

 

[Lisa Thomas]

please don't think the worst by default. Imagine I was paid £1000 per month via PAYE. Then I got the shares and and paid £500 via PAYE and £500 by divi. When I changed to contractor the PAYE changed to Invoice, so £500 + £500. Imagine the Divi stopped and I increased my invoice to £1000. All fair. Then the company has paid a DIVI where I'm due £20k. even if I take my £6k off (invoice at £500 per month) There is still £14k difference. The question is can they legally with hold it. I'm happy to knock off the £6k I could just issue a credit note for that (pay it back so the vat is straight) and then get paid the £20k divi, this is what I suspect they are trying to dodge.

Your question has been answered by several posters. Feel free to dm me if you need a solicitor to act for you to recover the dividend.

 

[TurnerW]

Thanks Lisa. I might need a stern letter.

 

[Lisa Thomas]

Sounds like it to me.