Resigning as director and dividends

[Toll50]

Hi. Apologies if this has been answered many times. I’m in a 50 50 shareholder relationship. If I resign as director is it better that the other director now pay himself a market rate salary for running the business (rather than low notional salary currently paid) OR can we just agree on a different dividend percentage split where he takes the majority and we also agree that he can’t just then subsequently award himself a higher salary !

Shareholder agreement silent on this and I’d prefer there wasn’t a high salary fixed cost being added to the business.

Can we still be 50 50 shareholders and agree a different percentage dividend split?

 

[Toll50]

Forgot to say we are both directors and the only shareholders. He is keen for me to resign!

 

[DWS]

If you both have the same class of share then you both get the same amount of dividends, have a look and at reclassing as Alphabet shares.
Why are you leaving as Director leaving only the other person to make all the important decisions with no one to disagree?

 

[Toll50]

If you both have the same class of share then you both get the same amount of dividends, have a look and at reclassing as Alphabet shares.
Why are you leaving as Director leaving only the other person to make all the important decisions with no one to disagree?

But are we legally allowed to keep it as 50 50 ownership and just change dividend split? Lots of reasons to leave after many years.

 

[DWS]

You can leave it as 50/50 but if you both have Ordinary shares then you both get the same dividends

 

[WaveJumper]

Forgot to say we are both directors and the only shareholders. He is keen for me to resign!

Yes I bet he does and its the last thing you want to do as already mentioned why give over control, the big question should be whats happened to the relationship that means you can't work together and if you do want to part company why can't he buy your shares out

 

[Elliot Green]

Once a director resigns from a company they lose their leverage and ability to influence the future prospects and development of the company, including but not limited to the deployment of the company's money and property.

 

[fisicx]

Shareholder agreement silent on this and I’d prefer there wasn’t a high salary fixed cost being added to the business.

Once you resign the remaining director can do whatever they want. The company can take them on as an employee at a huge salary and there isn’t much you can do about it. You can vote at the AGM but with only 50% of the shares you can’t stop the salary being paid.