Removal of Person of significant control

[Daddyorchips]

Advice please! I started a limited company with a “friend” in June 2020. We were both directors with 50% shares. We quite quickly fell out and I resigned as director in November 2020 - it was not amicable at all

I have just looked at companies house today to see if the first year account have been filled yet (which I can’t see have) however i have noticed I have been removed as a person with significant control on the business back in April 21 - this is the first I have known about this - a few questions
1 - can she do this?
2- does this effect my 50% shares
3 - will I still get a dividend and how do I check this?

 

[Frank the Insurance guy]

Unless you have sold the shares, they should still be there.

You will be entitled to dividends in equal amounts to the other 50% shareholder - however in these instances, the other shareholder (and I assume sole director) can pay themselves a salary instead of paying any dividends, which will avoid the business paying you anything!

As a 50% shareholder I think you may be entitled to see the accounts/financials - no doubt one of our forum members with experience in this will respond soon.

As for a "person of significant control", as you resigned as a director, I would suggest leave this to show the other director as the only person of significant control. Why do you want to be shown as someone with significant control when you do not have any control? Not sure if you have to legally be shown as you have 50% of shares, but someone should be able to confirm this for you.

 

[UKSBD]

Is the other person still listed?

If so, how many shares does it say they have?

 

[cjd]

Your shares can't be taken from you unless there's a shareholder's agreement in place. Is there?

As a 50% shareholder you are a person of significant control and that can't be changed by the other director.

You need to check whether the company has issued more shares which would dilute your 50% to below 25%. This would be unlawful without a shareholder's vote requiring 75% agreement. Which of course you wouldn't have agreed to.

You need to take legal advice.

 

[Mark T Jones]

As above.

Companies House simply publishes the detail submitted. They never challenge its authenticity unless given a reason to do so.

The key question here is what your actual shareholding is - changes should be recorded at Companies House, but in your case I'd make a specific request of up to date information.

In either case it would appear that you co-owner is acting in a dishonest way.

 

[The Resolver]

As a 50% shareholder I think you may be entitled to see the accounts/financials - no doubt one of our forum members with experience in this will respond soon.

In the absence of provision in a Shareholders Agreement or Articles of Association giving shareholders access to more than the filed annual accounts,such as access to the contemporaneous bookeeping and banking , then the annual accounts is all a shareholder is entitled to.

As a 50% shareholder you are a person of significant control and that can't be changed by the other director.

You need to check whether the company has issued more shares which would dilute your 50% to below 25%. This would be unlawful without a shareholder's vote requiring 75% agreement. Which of course you wouldn't have agreed to.

You need to take legal advice.

To clarify, CJD's reference to 'below 25%' is because you are a PSC if you have at least 25%.
The vote needed to issue more shares is only 51% not 75%. That still could not take place without your vote.

As above.

Companies House simply publishes the detail submitted. They never challenge its authenticity unless given a reason to do so..

In fact, Mark, CH never challenge even if given a reason to do so. There is a form to request rectification but they will only rectify if the person filing the false information fails to stand by their assertion in correspondence with CH. However an order of court that the record should be changed will , of course, be honoured. But why should it be necessary to incur the cost of court action when all that is needed is production of the evidence (in this case a signed Stock Transfer Form reducing the shareholding to below 25%).

Your co-shareholder has told an untruth to CH. She may claim ignorance so not technically a knowing lie (just an untruth) but once she is notified formally and it is clear it is an untruth then for her to double down on her claim with CH once a formal Rectification procedure is taken out at CH, could amount to fraud. In my experience putting such person on formal notice that the position they claim in untenable and amounts to a deception of a govenrment agency sometimes results in a voluntary withdrawal.

Many may recall the Petition I raised earlier in the year to require evidence before changes are made as to a claim that a director has resigned/been dismissed.This is the same issue. I am afraid my digital marketing skills are not the best and there are only 62 signatories so far. I would welcome help in promotomg the Petiton to raise this number before it closes at the end of October. I only need 99,938 additonal signatories to have the issue debated in Parliament. The Petiton is at https://petition.parliament.uk/petitions/581623

 

[2020Lawyer2020]

Do you have access to the company's Companies House account? (Probably no longer because you are not a director any more). If you do you could make the change on line to make it clear you remain a PSC.

In a sense that is an irrelevance however as you still hold 50% of the shares. As you have no shareholders' agreement the director could award himself a huge salary enough to ensure you do not receive dividends (although sometimes company law in theory might mean you could stop that). You need to think about what the company is worth and if you can persuade the director to negotiate to buy your shares.