Partnerships

[commited]

I'll try to keep this brief. I set up a limited company 2 years ago as sole director, owning all the shares although I set the company up with someone else. Due to her financial circumstances she thought it best not to be listed as a company director but we both said it would be 50/50 split. Nothing in writing. We both worked on developing the company for 3 months then she left as she had to get some money but always promised to put money into the company and indeed return to help run it.

Bottom line, she never came back. It was kept amicabale all last year but a couple of weeks ago I spoke with her to tell her that I was facing bankruptcy and the company was most likely to be liquidated as the debts were just too high. She was Company Secretary and was concerned what implications it would have for her. There was no offer of money to rectify it, fine. Someone has come to the rescue and is taking it forward - she's now saying she's already had a share of the company and wants it! She's had no involvement with the company for over 20 months and doesn't even know the business model today as it has evolved so much.

Am I obligated to give her anything, by law? She doesn't deserve it and I get furious when I talk with her, she can't say what she wants as she openly admits she doesn't know anything about it today. I want to be fair but seriously think she's trying to take me for a ride and can't honestly expect anything out of it at this stage - particularly when she knew I was about to liquidate it and didn't offer any help.

Any thoughts very gratefully received.

 

[Alpha]

From the corporate point of view

The shareholders own the company ....no one else.

If she loaned the company money then it would be obligated to repay the loan (with interest if agreed)

She was not a director and therfore did not have a service contract so no obligation to pay her as a director.

She also presumably was not on the company payroll so no obligations there.

So no way of her being paid by the company.

However

If she was your wife/ partner she may of course have a claim on the share value of the company. I am assuming that this is not the case and beyond my knowledge anyway.

 

[commited]

Thanks asmoore. You've confirmed what I suspected, and no, we are not linked in anyway aside from setting up the company.

I hate confrontation but in business that is all too often required and I wanted to be completely confident that I was correct to take this stance before proceeding.

Funny how when things show a little fortune how everyone comes out of the woodwork....

 

[will7]

By law, if she was a shareholder, then you are legally bound to pay her whatever share she had.

However, if you can prove she had no involvement in the company, have records to prove that she put no money in and helped in no way towards the company, then maybe, by taking her to court, you may win the case due to lack of effort - unsure about the chances though.

The way I see it, there are 4 outcomes to this:

1) You pay her however much money you owe her and she goes away, out of the company.

2) You take her to court, you win the case, you don't pay her anything, she goes away.

3) You take her to court, she wins the case, you pay her what is owed.

4) You take her to court, she is scared, backs out and goes away.

Obviously, number 2) or 4) would be the best one for you!