is my director acting in the best interests of the company?

Discussion in 'Legal' started by Flappypaps, Apr 17, 2019 at 7:03 AM.

  1. Flappypaps

    Flappypaps UKBF Newcomer Free Member

    4 0
    Hi all,

    I am looking for some advice on how to deal with a difficult situation.

    I have found evidence that one of the company shareholders has been giving another company orders and been getting paid cash from them for doing so.

    These transactions, in my opinion, should have gone through the company that they are a shareholder of as they are for the our core product set.

    There is no reason, other than the cash payments, that I can see for this being done.

    I believe it's a clear breach of the shareholder agreement and its had an affect on staffs commission payments as well as the companies profitability.

    I have evidence going back at least 12 months and I'm unsure how to act.

    Would you reccomend that I notify the other shareholders?
     
    Posted: Apr 17, 2019 at 7:03 AM By: Flappypaps Member since: Apr 17, 2019
    #1
  2. WaveJumper

    WaveJumper UKBF Regular Free Member

    153 28
    First question are they a shareholder or Director or both?
     
    Posted: Apr 17, 2019 at 8:19 AM By: WaveJumper Member since: Aug 26, 2013
    #2
  3. Flappypaps

    Flappypaps UKBF Newcomer Free Member

    4 0
    They are both.

    The company has 3 shareholders/directors in total
     
    Posted: Apr 17, 2019 at 8:29 AM By: Flappypaps Member since: Apr 17, 2019
    #3
  4. THE_SPANNER

    THE_SPANNER UKBF Contributor Free Member

    31 1
    Probably.

    I was working in an IT department and a senior/head of IT person who was responsible for signing off PO's seemed to be only interested in getting quotes from one particular supplier.

    As you can probably guess at inflated prices to other suppliers. The other staff in IT always chatted between themselves about how much more expensive the same kit is and why there is never the requirement for comparable quotes.

    One day when one of the IT minions was leaving the company, the board were 'advised' of this.
    The person involved made a quick exit from the company.

    Turns out they had a relative working for/owning that supplier.
    So no doubt a personal interest or a nice cash bonus.

    Does the company have procedures on purchasing and obtaining quotes?
    If the company he is a shareholder of produces the identical product (identical spec) being purchased elsewhere then in my opinion questions should be asked?

    Thanks,

    Mark
     
    Posted: Apr 17, 2019 at 8:33 AM By: THE_SPANNER Member since: Mar 16, 2019
    #4
  5. WaveJumper

    WaveJumper UKBF Regular Free Member

    153 28
    Are you a Director / Shareholder
     
    Posted: Apr 17, 2019 at 8:38 AM By: WaveJumper Member since: Aug 26, 2013
    #5
  6. THE_SPANNER

    THE_SPANNER UKBF Contributor Free Member

    31 1
    Me no, just a minion...
     
    Posted: Apr 17, 2019 at 8:43 AM By: THE_SPANNER Member since: Mar 16, 2019
    #6
  7. WaveJumper

    WaveJumper UKBF Regular Free Member

    153 28
    If you are 100% sure of your evidence are you not able to bring this to the attention of your direct line manager. As mentioned above (depends I suppose on size of your company) there should be polices in place for dealing with purchasing services etc apart obviously their obligations as a director which sounds like they are in breach of
     
    Posted: Apr 17, 2019 at 8:53 AM By: WaveJumper Member since: Aug 26, 2013
    #7
  8. estwig

    estwig UKBF Legend Full Member

    12,095 4,196
    What has this got to do with you Flappypaps, how does it affect you?
     
    Posted: Apr 17, 2019 at 9:05 AM By: estwig Member since: Sep 29, 2006
    #8
  9. Flappypaps

    Flappypaps UKBF Newcomer Free Member

    4 0
    We dont have any recorded procedures for the procurement of stock.
    It's not just related to the purchasing of stock.
    He appears to be transacting deals (purchasing and selling) and then passing the deal onto this unconnected company for a cash kickback.

    I'm not a director/shareholder, just a senior manager.

    Thinking that I have no choice to inform the other shareholders as it's having an affect on the companies revenues and margins.
     
    Posted: Apr 17, 2019 at 9:08 AM By: Flappypaps Member since: Apr 17, 2019
    #9
  10. estwig

    estwig UKBF Legend Full Member

    12,095 4,196
    You have absolutely no idea if this director's actions are detrimental to the company, you do not know what deals he has struck.

    You stand up and call this person a thief, expect a big backlash.
     
    Posted: Apr 17, 2019 at 9:12 AM By: estwig Member since: Sep 29, 2006
    #10
  11. THE_SPANNER

    THE_SPANNER UKBF Contributor Free Member

    31 1
    Negotiating any 'good deal' shouldn't involve cash coming your way...

    I think that's known as a 'bung'.....
     
    Posted: Apr 17, 2019 at 9:17 AM By: THE_SPANNER Member since: Mar 16, 2019
    #11
  12. estwig

    estwig UKBF Legend Full Member

    12,095 4,196
    Why?
    How can you come to that conclusion without knowing anything about it.
     
    Posted: Apr 17, 2019 at 9:33 AM By: estwig Member since: Sep 29, 2006
    #12
  13. WaveJumper

    WaveJumper UKBF Regular Free Member

    153 28
    Yes agree with both of the above, and you don't know if the rest of the board are aware of this unless you have a very close relationship with one of your directors you could bring a whole lot of grief on yourself
     
    Posted: Apr 17, 2019 at 9:33 AM By: WaveJumper Member since: Aug 26, 2013
    #13
  14. Flappypaps

    Flappypaps UKBF Newcomer Free Member

    4 0
    How can it not be detrimental to the company if somebody is gifting deals to a 3rd party for cash payments?
    It has a clear affect on the companies profits.

    It's certainly a difficult situation and I appreciate people's comments.
     
    Posted: Apr 17, 2019 at 9:48 AM By: Flappypaps Member since: Apr 17, 2019
    #14
  15. Newchodge

    Newchodge UKBF Big Shot Free Member

    11,524 2,967
    As a shareholder they can do whatever they like unless it is specifically precluded in the shareholders' agreement. As a director they cannot.

    Whether it is for you to discuss it with the other shareholders is a question for you.
     
    Posted: Apr 17, 2019 at 9:53 AM By: Newchodge Member since: Nov 8, 2012
    #15
  16. THE_SPANNER

    THE_SPANNER UKBF Contributor Free Member

    31 1
    You answered your own question...
    So far all we know is what the OP said;
    In plain English; "I'll pay you cash for sending your company orders to me".... is that a contract?
     
    Posted: Apr 17, 2019 at 9:54 AM By: THE_SPANNER Member since: Mar 16, 2019
    #16
  17. Mr D

    Mr D UKBF Legend Free Member

    13,174 1,441
    As Cyndy says as a shareholder he can do what he likes, as a director he has responsibilities.

    You getting involved can open a can of worms on yourself. And what you see may not be the whole story.
     
    Posted: Apr 17, 2019 at 10:15 AM By: Mr D Member since: Feb 12, 2017
    #17
  18. estwig

    estwig UKBF Legend Full Member

    12,095 4,196
    Without knowing anything else about it, seems fine to me.
     
    Posted: Apr 17, 2019 at 10:16 AM By: estwig Member since: Sep 29, 2006
    #18
  19. billybob99

    billybob99 UKBF Regular Free Member

    756 133
    Have you seen any cash change hands.
     
    Posted: Apr 17, 2019 at 10:31 AM By: billybob99 Member since: Apr 23, 2013
    #19
  20. stugster

    stugster UKBF Legend Full Member

    9,322 2,071
    Not enough information to make a determination here.
     
    Posted: Apr 17, 2019 at 11:07 AM By: stugster Member since: Feb 1, 2007
    #20