Resigning as a director

[GrahamB41]

Hi,
I am a 49% share holder in a Ltd company and I am looking to resign and just walk away. When I officially write to the other director, can I take 49% of what’s in the business bank account? There’s no debt in the business.

 

[StevensOnln1]

No you won't be able to take 49% of the bank balance. Your shares entitle you to 49% of any dividends declared from the company's profits, which the directors decide when to pay. Do you have a shareholders agreement? You could try offering the other shareholders a price to buy your shares when you walk away.

 

[fisicx]

Being a director and shareholder are two different things. If you resign as a director you get nothing. But you are still entitled to your shareholder dividends.

 

[Gyumri]

can I take 49% of what’s in the business bank account? There’s no debt in the business.

You've got to be joking. The money in the company's bank account belongs to the company - it's not there for any shareholder or even director to just take when they feel like it.

 

[GrahamB41]

You've got to be joking. The money in the company's bank account belongs to the company - it's not there for any shareholder or even director to just take when they feel like it.

This is a forum right? I’m asking a question to which I didn’t know the answer to. Not everyone will be as in the know as you so please just don’t answer if you feel compelled to be a smart a**

No you won't be able to take 49% of the bank balance. Your shares entitle you to 49% of any dividends declared from the company's profits, which the directors decide when to pay. Do you have a shareholders agreement? You could try offering the other shareholders a price to buy your shares when you walk away.

thanks for your reply. No shareholders agreement unfortunately although in all honesty, there’s little to divide as the company hasn’t made a decent profit for a while.

 

[GrahamB41]

Being a director and shareholder are two different things. If you resign as a director you get nothing. But you are still entitled to your shareholder dividends.

Thanks for your reply. It would be good if there would be dividends in the future but that would heavily have relied on me making the business work. I am the asset so to speak but sadly have been sold a story in order to get into bed with this conglomerate who spoke about having the infrastructure to make e commerce businesses thrive.

 

[Newchodge]

Thanks for your reply. It would be good if there would be dividends in the future but that would heavily have relied on me making the business work. I am the asset so to speak but sadly have been sold a story in order to get into bed with this conglomerate who spoke about having the infrastructure to make e commerce businesses thrive.

Are you owed any money in your DLA?

 

[GrahamB41]

Are you owed any money in your DLA?

Sadly not.

 

[fisicx]

In that case you walk away with nothing. All you can do is try and sell your shares.

 

[DontAsk]

Have you signed any personal guarantees?

 

[pentel]

Does the other director want to continue?

If not liquidate the company.

 

[GrahamB41]

Sadly not.

Actually i am. Just had a call with my accountant and i am owed 38k. I def dont have this in the business bank account though

 

[GrahamB41]

Does the other director want to continue?

If not liquidate the company.

He would love to as he loves the brand but he knows that it is me who basically is the brand and who runs the show.

 

[GrahamB41]

Have you signed any personal guarantees?

Nope.

 

[BubbaWY]

Actually i am. Just had a call with my accountant and i am owed 38k. I def dont have this in the business bank account though

Im surprised that you are surprised that the business owes you £38k.

 

[GrahamB41]

Im surprised that you are surprised that the business owes you £38k.

What exactly do you want me to say in reply? Are you perfect?

 

[Spur Support Services]

Hi,
I am a 49% share holder in a Ltd company and I am looking to resign and just walk away. When I officially write to the other director, can I take 49% of what’s in the business bank account? There’s no debt in the business.

You really need to speak with the accountant to understand your financial position and the company's finances/commitments, then speak to the other shareholder to see if they want to buy your shares and are willing to negotiate recovery of your Director's Loan account.

Please note that if there any company assets that you intend to keep, the value of these would reduce the amount the company owes you (for example computers, laptops, office equipment, phone handsets (if company owned) and car - assuming car is not leased).

Once you understand your position then enlist the help of a commercial lawyer to work with your accountant to draw up the negotiated loan interest/repayment terms and share sale agreements. (NB if interest is payable then there are extra income tax deduction compliance requirements on the company, so ensure you consider these when drawing up the agreement)

It may be that in this way, you can reach an agreement with the other shareholder for the first repayment to be equal to 50% of the bank balance, to ensure the company has sufficient working capital to continue. Maybe more, maybe less.

If you are wanting to step away due to ill health, such as burn out, it is worth checking whether the company has any income protection insurance (or similar) and whether this could be used to support you and the company in the immediate short term, before taking that final step of moving away completely.

 

[fisicx]

What exactly do you want me to say in reply? Are you perfect?

No, but one of the prime duties of a director are to manage the finances. When you sign off the accounts you should know who owes what and to whom.

 

[japancool]

What exactly do you want me to say in reply? Are you perfect?

Well, if the director's loan came about because you lent the business money, you would know that, surely?

However, if it came about another way, for example, because the company paid you dividends which you did not draw out, that's different. You should negotiate with the other shareholders to draw these out, if there's enough money there to do so (or part thereof).

 

[GrahamB41]

No, but one of the prime duties of a director are to manage the finances. When you sign off the accounts you should know who owes what and to whom.

I now have learnt this and am still learning. My new accountant has been good and is giving me all the info i lacked before with a previous accountant.

 

[MBE2017]

I now have learnt this and am still learning. My new accountant has been good and is giving me all the info i lacked before with a previous accountant.

Have you checked on Companies House that you definitely OWN 49% of the shares? Not being a smart arse, you seem to be in the dark on several things up to now, and just recently another poster thought they had shares when they did not.

 

[GrahamB41]

Have you checked on Companies House that you definitely OWN 49% of the shares? Not being a smart arse, you seem to be in the dark on several things up to now, and just recently another poster thought they had shares when they did not.

Thank you. I really appreciate your help. I have been in the dark to my detriment and really trying hard to gather as much info as i can and to learn as much as i possibly can. I can confirm that i definitely own 49% of the shares and the new partner owns 51% to which my new accountant has confirmed this as she was the one who made the changes.

 

[Gyumri]

This is a forum right? I’m asking a question to which I didn’t know the answer to. Not everyone will be as in the know as you so please just don’t answer if you feel compelled to be a smart a**

You're right. I apologise for my smart a*** remark. I was fairly surprised that a director could think that they could be entitled to simply draw what they think they are owed from the company's bank account.
You have fortunately received some sensible as advice from other contributors.

 

[GrahamB41]

You're right. I apologise for my smart a*** remark. I was fairly surprised that a director could think that they could be entitled to simply draw what they think they are owed from the company's bank account.
You have fortunately received some sensible as advice from other contributors.

Thank you for reply and apology. I dont feel great knowing i lack knowledge in this area but I am doing my best to learn as much as possible.

 

[Richard Dastardly]

If you're 'owed' £38k then I'm assuming this is your equity in the business according to what the statutory accounts say. So if you want out, then that's a starting point..?

 

[GrahamB41]

If you're 'owed' £38k then I'm assuming this is your equity in the business according to what the statutory accounts say. So if you want out, then that's a starting point..?

Yes this is exactly it. I put in that money over the years myself as a loan and didn’t realise I could remove this until my new accountant told me. I know the new partners won’t pay me this money so I am now thinking of just staying in as a director and as the revenue comes in, remove what I am owed. Does that sound right from your pov? I can’t believe I was almost about to walk away with absolutely nothing.

 

[fisicx]

Are you sure this is correct? Investment are normally paid back is dividends. You can’t just take money out the bank.

 

[Richard Dastardly]

I mean there's a lot of factors - what's the bank balance, what's the relationships like, is it a fintech unicorn, what are the hidden assets, are they gangsters etc but the starting point is at least £38k becuase that's what the accounts show - and go from there

 

[GrahamB41]

I mean there's a lot of factors - what's the bank balance, what's the relationships like, is it a fintech unicorn, what are the hidden assets, are they gangsters etc but the starting point is at least £38k becuase that's what the accounts show - and go from there

The relationship is ok. I don’t think they’re gangsters but the partner is certainly ambitious and wants to eventually sell his portfolio of businesses on. Yes the accounts def show that the 38k was made in directors loans and also reimbursements from the years I was working from home and things like that

 

[GrahamB41]

Are you sure this is correct? Investment are normally paid back is dividends. You can’t just take money out the bank.

? oh really? Because my accountant was adamant the accounts showed that this amount was owed to me and said I could make withdrawals at any time to that amount (although I don’t have that amount in the bank).

 

[japancool]

Yes this is exactly it. I put in that money over the years myself as a loan and didn’t realise I could remove this until my new accountant told me. I know the new partners won’t pay me this money so I am now thinking of just staying in as a director and as the revenue comes in, remove what I am owed. Does that sound right from your pov? I can’t believe I was almost about to walk away with absolutely nothing.

Even if the company had the money, you can't just remove it. Given that your partner is the majority shareholder, you would probably need his agreement.

 

[UKSBD]

The relationship is ok. I don’t think they’re gangsters but the partner is certainly ambitious and wants to eventually sell his portfolio of businesses on. Yes the accounts def show that the 38k was made in directors loans and also reimbursements from the years I was working from home and things like that

Are you the Managing Director, are there other directors or just other shareholders, if other directors are they active?

 

[GrahamB41]

Are you the Managing Director, are there other directors or just other shareholders, if other directors are they active?

Just two directors. I’m 49% holder and the other 51% as of 4 months ago. I founded the business and worked on it solely until the second director came in.

 

[japancool]

Be careful what you do and how you do it. Make sure you have a proper agreement to do it, and that it is documented. Otherwise, removing money from the company without authorisation is theft, even if the company owes you money, especially if it results in the company's other bills not getting paid.

 

[GrahamB41]

Be careful what you do and how you do it. Make sure you have a proper agreement to do it, and that it is documented. Otherwise, removing money from the company without authorisation is theft, even if the company owes you money, especially if it results in the company's other bills not getting paid.

Thanks for this. So basically I need to speak with the other partner as to an agreement of how and when I can withdraw money from the business bank account as long as running costs are being paid?

 

[japancool]

Thanks for this. So basically I need to speak with the other partner as to an agreement of how and when I can withdraw money from the business bank account as long as running costs are being paid?

Basically, yes.

 

[GrahamB41]

Basically, yes.

Okey dokey. Well I can’t see that being a problem but then I’m also aware that he could say no. If he did then where would I stand? I lent that money to my company in good faith as start up capital and when I needed the odd cash injection and it’s all recorded properly by my bookeeper and account.

 

[Newchodge]

Just two directors. I’m 49% holder and the other 51% as of 4 months ago. I founded the business and worked on it solely until the second director came in.

Came in? You must have agreed a deal with the other dorector?

 

[Gyumri]

One issue is that the company owes you money but there is no clear agreement that your loan is repayable on demand although it seems it would be repayable within a reasonable period.

So I would first clarify your position in writing that you want the loan returned and if the other director doesn't play fair and agree to some arrangement then you may need to apply to the court to wind up the company on the just and equitable basis or simply sue the company for the return of the loan.

Or perhaps the other shareholder can buy you out. Either way you should do your best to resolve things amicably.

 

[GrahamB41]

Came in? You must have agreed a deal with the other dorector?

I really don’t even want to go there. Whilst I am not unhappy with the situation, I would like to exit at some point and with the loan I put in at least.