wanting an advice from you guys ! thanks

[alwane]

Hello Dear Folks,
6 months ago, i worked on an idea, i developed the software we need to do the business and my two partners will pay the salary of the stuff for the first year (just the salary all the other charges are on me), but recently they create a company to deal with customers of this new business without including me, maybe they thought they will pay a share of the benefits without necessary being parts of this new company.
Do you think is this a healthy way to proceed or i'm over reacting ?
Thanks in advance !

 

[The Byre]

Stay away from patnerships!

They seem to nearly always end in tears.

 

[Mr D]

Who owns the software?

You?
Them?
The company?

Whatever agreement you made with them - are they sticking to it?

 

[alwane]

Thanks for the advices guys,
I developed the software from scratch in my own time and I eat my money in that time so I own it, and the business is my field of expertise...
And the first time we agreed that I will have 50% of shares,
I didn't discuss this with them yet, I'm seeking of advices first
Thanks

 

[Mr D]

Be wary.

If you join them in the company as a director and they are both directors then you will have one vote to their one vote each.
Which means anything requiring a majority to decide will go whichever way the majority wants.
Does not matter about shares - they matter when receiving dividends or at shareholder meetings.
Companies are run by directors not shareholders, your shares are not counted in director decisions.

If you do joinnwith them get agreements in writing now while you are still talking. The forums are lousy with people who simply trusted the other relatives or friends. And things ended badly.

Perhaps you could licence your software to the company? They run the company, you get regular payments and the company owns nothing.

 

[mattk]

You have to ask yourself, what do you want out of this? Is this a product you could sell to multiple companies or is it specific to your partnership?

If it was me, the actions detailed would be a breach of trust and I would be looking to protect my creation contractually, ideally by offering the new company your products as Software as a Service model.

 

[alwane]

Hello,
Thanks to you all for taking time to answer me,
in fact the software is just a peace of the puzzle, there is a domain name and customers send their orders via this domain (in the legal mention it must be specified the owner of the domain), and in the backend i will be in charge to process this orders (they need some extra works beside the software)

 

[Newchodge]

Was your original organisation a limitd company?

 

[alwane]

at the beginning there wasn't any organization, we agreed that i develop the business and then we create a limited company

 

[MBE2017]

Thanks for the advices guys,
I developed the software from scratch in my own time and I eat my money in that time so I own it.....the first time we agreed that I will have 50% of shares,
I didn't discuss this with them yet, I'm seeking of advices first
Thanks

You do not necessarily own the software, you seem very uncertain of whether you even have shares. I would check ASAP and take proper legal advice.

 

[alwane]

@MBE2017 What do you mean by i don't necessarily own the soft ?
1 - I Developed it based on :

1. my own knowledge of the field and
2. my skills in programming,

2- In my own time and money, i mean i didn't get paid by anyone to do this

Are you serious man , am I loosing my software coz i went to see some investors ?

1- I developed this business idea and i searched for investors,
2- I meet those two and we agreed about creating a company with 50% of shares owned by me,
3- Recently they create the company without me, perhaps in their minds they want to pay me like an employee (this was not the first agreement)
4 - I don't wanna be an employee, i want to create a startup and developed it, maybe sell it in a few years,
5 - If i agreed to be treated like this, if the business doing good, maybe in a few years i will be replaced by cheaper one ...

I really have a strong felling that i'm getting screwed here ...
Thanks

 

[mattk]

Did you sign anything with your "investors"?

 

[alwane]

@mattk no!
Thanks for your time

 

[STDFR33]

You probably own the software. Though best run everything by a solicitor.

@Mr D mentions two directors v one director but that doesn’t mean Jack Sheet. Shareholding is far more important. You need majority shares.

If trust issues are apparent now, it’s probably doomed to fail as it currently stands.

 

[kulture]

You need to see a solicitor to avoid problems. It is indeed a posibility that the COMPANY owns the software depending on the relationship between you, the investors and the company. It all depends on what paperwork you signed or what they can argue you agreed to. It is clear that you 100% believe that the software is yours, but go see a solicitor the make sure that you have not been tricked into a different position.

 

[Mr D]

You probably own the software. Though best run everything by a solicitor.

@Mr D mentions two directors v one director but that doesn’t mean Jack Sheet. Shareholding is far more important. You need majority shares.

If trust issues are apparent now, it’s probably doomed to fail as it currently stands.

You run your company different. One vote per director in some companies.
Shareholders vote their shares - and shareholders do not run those companies.

 

[STDFR33]

You run your company different. One vote per director in some companies.
Shareholders vote their shares - and shareholders do not run those companies.

3 directors. The minority director with majority shareholding can just get rid of the two directors. Job done.

 

[mattk]

@mattk no!
Thanks for your time

If you haven't signed anything, then the ball is very much in your court. Decide what you want to do and take the new company a proposal.

If it was me, I would want a company, 100% owned by me, which holds the IP to the software. This includes support, maintenance, updates and so on.

The other company becomes your client and pays you a fee for use of the software, as I said earlier, following the SaaS model.

 

[Mr D]

3 directors. The minority director with majority shareholding can just get rid of the two directors. Job done.

Oh sorry, I read it as 50% shareholding not majority.
My mistake.

Yes a majority shareholder does have options that non majority shareholders do not have for replacing directors over time.
In the meantime can still mess things up.

 

[LanceUk]

You agree with them that when things are ready, a company will be created with you having a 50% shareholding. Presumably, this was the company to operate the business using your software and not to sell donuts at the foreshore on a winter's day. Then they go and set up a company without you having any shares, presumably to operate the business. And you are asking if you should continue? Seriously!

From what you say, the IP in the software should be yours, but they have now undertaken a detriment, which means, if they can argue that what they are doing was the agreement and that they would employ you as part of that agreement, your sole IP interest in the software, in theory, could be up for debate. So, in your shoes, I would see an IP solicitor to determine if the sole IP still rests with you, if there is any risk to it, and what you can do to to protect it from being diluted. If the ideas is that good, and you have a working product, you will find other investors who hopefully have more integrity.

And as for dealing with these investors going forward - if they have already done this, then can you trust them not to pilpher the books or try something else on. Does not sound like the foundation of a long and fruitful relationship to me...

Of course, you say they will work in the company, and they may posess certain specialist skills that are hard to find, in which case, you may have to look for a way forward working with them. Make sure everythig is document in Articles/MoA, and also personal contracts (again, I would see a lawyer) do everyone knows what is what and there is little wriggle room.

Of course, if you misinterpreted what the agreement was, then I take a lot of the above back (except from seeing a good IP lawyer).

 

[MBE2017]

@MBE2017 What do you mean by i don't necessarily own the soft ?
1 - I Developed it based on :

1. my own knowledge of the field and
2. my skills in programming,

2- In my own time and money, i mean i didn't get paid by anyone to do this

Are you serious man , am I loosing my software coz i went to see some investors ?

From your original post.....”6 months ago, i worked on an idea, i developed the software we need to do the business and my two partners will pay thesalary of the stuff for the first year (just the salary all theothercharges are on me)”

Maybe just bad wording, but it sounded like your partners had possibly paid you whilst you developed the software, which could bring IP ownership into question.

Either way, even if you decide to proceed I highly doubt your partners will not insist that the IP be incorporated into your shared company.