Should I resign as a director?

[Smiler]

Hi,

My husband left me for another woman two years ago and we are still not yet divorced. I am a joint director in his limited company and was also company secretary. Since he moved out, I have not seen any of the company's financial records and my husband's accountant does not invite me to any meetings they may have, (not that I would understand much anyway to be honest). I do not know who my husband has down as secretary anymore.

The only things I have received from my husband relating to the business in the last two years, are dividend vouchers saying that I have been paid thousands of pounds in dividends, when I have in fact received nothing!

I work full time, but only for a small salary. The tax office however thinks that I am receiving dividends from the company and have charged me a small fortune in tax bills!

Would it be in my best interests to just resign as company director? If so, how do I go about doing this please?

Thanks for any help and advice you can give me.

 

[The Resolver]

You resign just by written notice - but don't do it just yet until you have had a satisfactory resolution of the issues The reason is that you have a lot of powers and rights to information which will come in use when negotiating a proper departure

The downside of being a director when you have no de facto control or access is that you could become personally liable should any rules be breached by your ex

So you need to resign fairly soon but not until you have resolved all the issues YOu therefore need to resolve them asap

The dividend has nothing to do with your directorship but because of your shareholding It looks like he has declared dividends, ie a profit share, which results in a tax liablity for you yet the company has not yet paid the monies over to you He has effectively ensured the company is liable to you for the dividends for which you can sue if no payment is made

This needs sorting very very quickly It would seem to be in his interest that you transfer your sherholding and also resign but you need to come out of the shadows and show you mean to exercise your rights up until the time

I specialise in resolving these company disputes and you are welcome to call me for a chat on how I can sort this out

 

[MikeJ]

Your husband appears to have committed fraud. You should, at the very least, ask for th dividends he claims you have received. The fact you are getting dividends suggests you are a shareholder too. By resigning as a shareholder you would still retain the shares - the two are not generally linked, unless there's something in the documentation (articles of association or shareholders agreement).

You can get information on the company setup from Companies House. Basic information is free, or you can pay a pound for more detailed information. I'd do that to start with, then speak to a lawyer.

 

[ANOTHER REBEL]

There are several points that arise from what you have said.

1) Are the shares in the Company in your Sole name or in Joint Names with your husband?

2) How were Dividends Paid in the past?

2) You are still legally married. Therefore there is nothing to stop the dividends on your shareholding continuing to be credited to an account in your joint names. This could either be a Joint Bank Account or a Joint Directors Loan Account in the Company's books.

3) Either way your Husband could legally take out the money untill you give instructions that the account must be operated on both your signatures.

4) You state that you only have a part time job and very little income.
Dividends come with a notional tax credit of 10%, and there is nothing further to pay unless there you are a higher rate tax payer. Your total taxable income from all sources would have to be over £43875 for 2008/09 before there was any further tax liability.

5) The Company would appear to be highly profitable and I would not recommend you negotiating your position on its own. This should be done as part of a Divorce Settlement. Your husband will have to declare the exact position to the Court. If he did not then he would be in contempt.

6) Many Private Companies have a Pension Fund for the benefit of Directors a pension sharing order would be part of the arrangement that the Court looks at closely.

7) What is your percentage share in the Company. If you and your husband are equal shareholders, then he cannot have removed you as a director, or stopped paying your wages. Again these may have been credited to a Joint Account as in 2) above and legally taken out by him.

What do the Tax Assessments received from HMRC show?

8) Many Private Companies declare a dividend to take advantage of the annual income tax thresholds, but leave the money in the company as a directors loan to provide working capital. This could be the case in this instance.

Sorry if this raises more questions than answers.

 

[Smiler]

Thank you all for your replies.

Another Rebel - I believe that the dividends are paid in to a Director's Loan Account, as I've heard my husband mention this in the past. I do not know how the dividends were paid in the past, I just remember my husband taking money out of the business as and when we needed it.

I am an equal shareholder with my husband, but receive nothing from the business. The main business account, in joint names, is managed by a paying in book that my husband has. I can see how much is going in and out of the business through the online banking service, but because he has the book I have no control over it. I also know that he has set up another higher interest business account, with his girlfriend, that he transfers some of the money into.

There is no pension connected with the business as far as I am aware. I started divorce proceedings two years ago, but after having paid out thousands of pounds from my savings and with no decent settlement offer, I have given up with it!

My husband is saying that I can keep the house and savings that we had and I am a bit worried that if I start asking questions about the business, he will change his mind. The savings, however, will not last forever and I have two unemployed children living at home with me. I can't afford to keep being taxed so highly - I work full time and the dividends (I didn't receive!) for 2008/9 made me a higher tax rate tax earner thanks to my husband's accountant!!

 

[ANOTHER REBEL]

I am an equal shareholder with my husband, but receive nothing from the business. The main business account, in joint names, is managed by a paying in book that my husband has. I can see how much is going in and out of the business through the online banking service, but because he has the book I have no control over it.

The first thing you need to do is contact the bank to find out who can sign on the business account.

If they reply it is either you or your husband, request that a cheque book is sent to you (I assume it is a current account). Write a cheque to yourself for the amount shown on the HMRC assessments as the net amount you are supposed to have received in dividends. As you have access to the online banking service, you can tell whether there is sufficient in the account to do this.

If they tell you that the account is operated on your husbands sole signature, give them notice that henceforth it will require both your signatures as directors of the company.

They cannot very well refuse to do this if your are both directors and shareholders.

Once they confirm that the account will require both signatures, advice your husband of the requirement. You do not want to embarrass what is obviously a profitable company by having cheques to suppliers returned.

This shoulld force your husband to start taking you seriously.

I have no personal experience of divorce, but am suprised that you state that you have got nowhere after spending substantial sums. Have you asked for these solicitors bills to be "Taxed".

The decree nisi and absolute are different issues to the financial settlement. I have been involved in preparing figures for the court for a financial settlement several years after the actual divorce had been granted.

The starting point is that the wife is entitled to 50% of the assets.

Potential future earning power; years spent bringing up the family, and by implication career forgone; dependants etc. are all taken into account.

The final settlement if often "biased" in the wife's favour.

As I said before, I would think hard before to agreeing to relinquish your shares in what appears to be a profitable company, which can give you an income for many years to come.

 

[Smiler]

The account is a Halifax Treasurer's Account and whoever has the book can pay in or withdraw. I rang the Halifax and they said that there is nothing I can do about it!

 

[ANOTHER REBEL]

I suggest you write or E-mail them.

Halifax is part of the Lloyds TSB Bank Group.

Here is the E-mail address of the Group Chief Executive I suggest you copy him.

[email protected]

If what they say is correct anyone with a stolen passbook could withdraw the balance, and the legal owner would be powerless. This is "b****hit".

Tell them that you will hold them liable for any losses you suffer.

I have used the device of copying E-mails to the CEO several times, and it has proved to be an efficient way of sorting matters. If they think they can get away with it, call centre staff, who are probably in "some distant land that is forever England" just fob you off with inaccurate information.

 

[gavin_d]

Hope you get this sorted. Please keep us updated.

 

[tanqas]

Hi, I have a similar story, please advise.
My husband wanted us to start a limited company (care agency recruitment). We both are directors, although he is the 100% shareholder. We both are signatories of business bank account.
Lately there were issues and i left home and bought a small 2 bed house. He later apologized and moved in with me but now saying if i can resign as a director!!!! I am little worried what should i be asking him before i resign. I mean there is a joint debt of around £1000 and few bills outstanding from our previous home??? Also if i resign today,,,,,what if something happens to him tomorrow would i be the next of kin as wife or can he appoint someone else to be his next of kin,,,,i mean his brother.

 

[Newchodge]

You have posted on an ancient thread. You may be better starting your own thread.

Being a director but not a shareholder carries liabilities without benefits. I would resign, but get some professional advice first. Speak to @The Resolver.

If you are his wife you are his next of kin. You cannot appoint someone to be next of kin. However, what does that matter? being next of kin does not affect inheritance rights if there is no will. if there is a will her can make whoever he wishes to be his beneficiary. But if you bought the current house, what is there of his that you would inherit?

I suggest that you speak to a family lawyer. Do you want your marriage to continue, or not?