Prevent shareholder from closing limited company

[karen mckenna]

Appreciate any constructive advice on how I can prevent closure of a company that I have 50% shares in. The other 50% shareholder has advised that he wants to close the business, claiming that it is insolvent. I requested detailed accounts but he and the accountant refused to provide these. The accountant stated it would cost £2-3k for the company to do this, which was not possible due to "lack of funds". So, I asked for copies of bank statements - to keep costs down. This request was ignored.

I do have proof that the other shareholder invoiced out £tens of thousands to his other company, which has effectively made the company insolvent. I also believe that he is diverting future revenues to his other company, by closing this business down.

He's proceeding with the closure application. I've applied to Companies House to stop the closure. Not sure if there's anything else I can do.

 

[UK Contractor Accountant]

Offer to take over his shares if the company is insolvent so he can walk away without all the hassle of continuing trading and/or insolvency proceedings.

 

[nelioneil]

He can't close down the company without at least 75% of shareholders agreeing to it.

Are you a director as well? If yes then you are allowed to see the bank statements and other financial records and you should not be blocked in any attempt to see them.

 

[karen mckenna]

I used to be, but resigned last year following a dispute with him. I thought it wasn't reasonable to shut a company down without showing a major shareholder the documents to support insolvency claims.

 

[Lisa Thomas]

He can follow the dissolution procedure here (if the criteria fits) and he follows the steps properly and no creditors object (HMRC are likely to unless final returns are filed):

https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration

Neither of you have enough % to Liquidate voluntarily via a CVL (assuming you will object) so his only option is to apply to Court for a Compulsory Liquidation, which will cost him several thousand pounds...

As a Director he needs to be taking professional insolvency advice.

As a Shareholder there is little you can do to prevent a Compulsory Liquidation if the Company is insolvent.

Liquidation may actually be the right thing to do/only option for the Company.

Perhaps you can buy his shares and become a Director again to rescue the business but take care not to do this if the Company actually is insolvent and you cannot trade out of it as you open yourself up to the risk of claims being brought against you personally by any subsequently appointed Insolvency Practitioner.

 

[karen mckenna]

I don't want to become a director again, I just want him to disclose what's happened to the company revenues and to be transparent. I know that he has diverted revenues out of the company and has effectively made it insolvent. So isn't he accountable in some way?

 

[Lisa Thomas]

Yes it's possible he may be responsible - perhaps you can agree to a CVL then the Liquidator will investigate - if there has been wrongdoing the Liquidator can pursue him for repayment.

 

[karen mckenna]

Thanks Lisa - this is all very useful information. I just want to make sure that I completely understand (as I'm a little out of my comfort zone). So, he has applied for a DS01 to strike off the company - which he has asked me to sign. I am refusing. So, am I right in assuming that he cannot proceed without my signature?

If so, is the next step for him to apply to a court for compulsory liquidation? Assuming that he won't pay for that, do we both then agree to a CVL and then a liquidator will investigate - so at least then he can be held accountable (which is my objective).

 

[ChrisCallaghan]

We have been discussing civil wrongs but of course if you feel that money has been illegally taken from your company it may amount to fraud. If you think that is the case it may be worth speaking to a criminal solicitor who may suggest you report it to the police.
Are you still a signatory on the bank account (you don't necessarily have to be a director)? You may be able to obtain copy statements directly from the bank (they will make a charge). I would avoid alerting them to the fact that you are in dispute.

 

[karen mckenna]

We have been discussing civil wrongs but of course if you feel that money has been illegally taken from your company it may amount to fraud. If you think that is the case it may be worth speaking to a criminal solicitor who may suggest you report it to the police.
Are you still a signatory on the bank account (you don't necessarily have to be a director)? You may be able to obtain copy statements directly from the bank (they will make a charge). I would avoid alerting them to the fact that you are in dispute.

Hi Phil - no, but I still receive text alerts every week (which I haven't divulged to anyone as it's my only window into what is going on). The text alerts have documented the large amounts that have been transferred out of the current account.

 

[ChrisCallaghan]

Most solicitors will give you a free initial short consultation (perhaps by phone) or you can go directly to the police if you think the transactions have been criminally illegal.

 

[Lisa Thomas]

Thanks Lisa - this is all very useful information. I just want to make sure that I completely understand (as I'm a little out of my comfort zone). So, he has applied for a DS01 to strike off the company - which he has asked me to sign. I am refusing. So, am I right in assuming that he cannot proceed without my signature?

I don't think he needs you to sign the DS01 - I think he can sign it himself as sole Director.

If so, is the next step for him to apply to a court for compulsory liquidation? Assuming that he won't pay for that, do we both then agree to a CVL and then a liquidator will investigate - so at least then he can be held accountable (which is my objective).

It's the other way around - assuming you won't agree to a CVL he may need to consider Compulsory Liquidation (if he doesn't manage to have it dissolved)

Yes, whichever Lqn route is taken the Lqr will investigate.

 

[Adam93]

You can request that the company have an audit under s476 Companies Act 2006.

But as the accountant says, there are no funds to do this.

If your name is still linked to the bank account, you may be able to get copies of the bank statements directly from the bank.