Where to begin......

[Gary Edwards]

Hi,

Apologies in avance for the long post and thanks in advance for reading/responding.

A few years ago I was approached by a guy I used to work for ocassionally in the commercial building maintenance sector. He was in a bit of a mess as had been suspended from works due to a health and safety incident. As this was his sole client he was desperate to turn things around so contacted me and asked if I would help him. He stated that long term his wish was to hand the company over to me and he would retain a percentage interest which would hopefully provide him with an income.

I agreed to this proposal but insisted I would earn the right to a percentage share in the business and so this saga began. I was instrumental in reversing the suspension and then we began rebuilding the company. I requested a 20% share in the company which was agreed to and the share issued. As the company began to grow, predominantly down to my efforts, I then requested an equal share in the company which again was agreed to on the basis of a 51%/49% split in his favour. After a short time I requested evidence of the share. My business partner then informed me that there was an issue with this. He informed me that he couldn't issue me with a physical share due to the factoring service we used. However he stated that we were to all intents and purposes equal partners and when we were able to remove the factoring service, he would issue me with a 49% share in the company. I have received a 49% share of all dividends since this agreement.

Over time the company continued to do well, but issues began to arise with his lack of effort and input. He was prone to periods of negativity/depression/inactivity which placed a lot of pressure on me to pick up the slack. I suggested on a number of occasions that he should take a back seat and go as a sleeping partner. The business was doing well enough for him to live comfortably off the dividend, and I could use his wage to employ someone who would be more beneficial to assist me. He was resistant to this, so continued to be more of a burden than a help and this caused more friction between us. At this point I was working 7 days a week and 16 hour days, living on junk food, cigarettes and stress. I had reached the end of the road and early this year suggested we end the partnership. We met with the accountant who outlined the options. The 1st was for him to buy me out for 60K. The 2nd option was to wind up the business, which the accountant indicated we would probably walk away with 40K each. The third was he would go sleeping partner but still retain his salary. I said I would need time to think about it and take advice. Shortly after this I deided to have a heart attack. Well my heart did. The rest of me wasn't too keen. In my absence my business partner has rung me once and sent me one text message asking for a sick note. He immediately put me on SSP. He also turned up without warning at my home with our accountant which incensed my girlfriend who then arranged a meeting with him to explain that this was wholly inappropriate, but then proceeded to turn up again alone a couple of days later. I must be honest, this had a profound effect on me as I considered it to be both provocative and disconcerting. As stress was a key factor in my illness, this really didn't help. In my absence my brother (office manager) initially did a great job in holding things together, and we communicated several times a day regarding general work related matters. Sadly MBP has subjected Darren to an enviroment which has now led him to take advice from ACAS due to being subjected to various forms of innapropriate behaviour at work. He has now gone off sick due to the actions he has been subjected to and will be pursuing a grievance against MBP. I have been contacted by both my employees and our sole client with their concerns as to what had taken place in my absence and have found myself apologising for his actions over and over again. He has made comments to my brother indicating that threatened him and his wife to secure a 49% share and had been extorting money from him. He also stated he was going to contact the police and his solicitor regarding this. He has also accused me of 'destroying the company' and also that my brother had acted in a threatening manner towards him, had been abusing him over a long period, and was not 'talking to him' all of which are just plain lies.

I have little doubt that his action are motivated by greed alone and he sees this as a perfect opportunity to try and capitalise on the situation. In my absence he has already employed someone in my role, and effectively forced by brother into not wishing to work for the company. I have done some research which would suggest that he has breached numerous aspects of his duty as a director and a business partner. I have grave concerns regarding the business as it stands and don't hold out much hope for its survival. I cannt forgive his actions and believe he needs to be held to account. Prior to my heart attack I would have no problem in dealing with this in a direct manner. However now I have to be careful with the amount of stress I am subjected to.

Under my tenure the business turned over +800K last year wth a +20% profit margin and was on course for something similar this year. I am not sure how it has performed in the 8 weeks I have currently been off sick for.

There is a mass of other detail I have regarding MBP's actions over the last 2 years. I am also aware of criminal behaviour coducted by MBP prior to my joining the company.

I am hoping for a little guidance with what I should now do. I have been mainly focused on rehabilitation for the last 8 weeks, but believe that I need to act soon to try and deal with the situation. I am not well versed in the legalities of the situation. My forte is problem solving.

Any help would be greatly appreciated. For the sake of the employees I have considered starting another company, and the client has even suggested this (as they are not at all happy with things currently) but I need to ensure I have no conflict of interests before I can move on.

Apologies again for the length of the post.

Thanks in advance.

 

[Ian J]

He informed me that he couldn't issue me with a physical share due to the factoring service we used. However he stated that we were to all intents and purposes equal partners and when we were able to remove the factoring service, he would issue me with a 49% share in the company. I have received a 49% share of all dividends since this agreement.

It's not true about the factoring company blocking a share transfer as they couldn't care less who owned the 49%

If you are using your own name here and the company that you are referring to is the one in your profile then you aren't listed as either a director or shareholder at Companies House

 

[The Resolver]

Are you a director? Ho many other directors?

Is there a Shareholders Agreement ?

Are there any document /emails letters that are evidence of the agreement to issue you with 49%?

I think you need initially step back from the emotion here and decide on a strategy to follow as shareholder. You need to know your right and options and let him know you are savvy on company law. It does not help you if he sees you as driven by anger at his conduct.

I cant say more from the information you have given me so far but you can call me for a 20 mn free initial chat, See my site at www.boardroomresolve.com for what I do

 

[The Resolver]

If you are using your own name here and the company that you are referring to is the one in your profile then you aren't listed as either a director or shareholder at Companies House

He is shown as a 20% shareholder in last year's Annual Return .He is not named in this years Confirmation Statement (under the new system) because you only now name Persons With Significant Control (PSCs) and they have to have at least 25% (or be shadow directors controlling the decision making).

I note that Gary's share are non voting A class but dividend sharing.

 

[Gary Edwards]

Hi Ian,

This was the reason he gave and at the time it seemed plausible. He indicated the factoring company (Lloyds Bank) were unlikely to agree shared ownership on paper as they would look for some form of surety from myself? I was happy to walk away from the company at that stage (after selling back my 20% share) and pursue another course. There was no pressure or coercion on my part and it was he who suggested this arrangement. Not sure how the law stands but the fact that prior to the agreement I received a 20% dividend and after received 49% should validate this?

 

[Gary Edwards]

Hi Graham,

No other directors. On paper his wife is another 20% shareholder i believe, but again he said once the factoring service was no longer needed the 49% share would be transferred to myself and I was prepared to accept this on trust. I would like to chat if possible, so when would be convenient to call?

 

[Gary Edwards]

Also many thanks to you both for replying!

 

[Lawyer]

The accountant's suggestions sound reasonable me and good advice. However if you cannot reach agreement that is when it gets harder legally.
So you may need to try to prove it was agreed that you would get 49% not the small % you were given. So look around for evidence of that - perhaps a signed heads of agreement or shareholders' agreement (... i bet you have neither), emails saying we agree the following which set it out, people inthe company who were there and can promise that was agreed as they were present at the meetings etc etc. In other words an uphill struggle but not imposisble to prove the 49% agreement. However you were paid 49% of the profits as dividends which might indicate the 49% agreement.

You may indeed find it easier to start a new company but again check any employment or other contract you have which might say you cannot take work from the clients and don't take any confidential information or intellectual property of the company and don't breach your directors' duties whilst you are still a director so may be best to do thist once you resign but resigning means you give up rights to information.

Would he and you be able to meet on neutral ground with perhaps the accountant present to reach an agreement because clearly you cannot go on as now.One of you will need to buy the other out I suspect or divide the business between you with some clients staying with one side and the rest to the other.

As helpfully pointed out above it looks like you are registered with non voting but dividend bearing shares. So unlikely any kind of shareholder meeting eveni f you had over 50% would get you very far as he'd out vote you.

If there were a lot of money available you might sue I suppose on the basis he and his wife agered you would own 49% and they never went through with the share transfers to you and you would seek a court order that they would enter into the paperwork to get you the share but that is not a very good result as clearly the two sides cannot work together anyway so some kind of parting of the ways compromise is going to be best. He has talked about going to the police. Why - has he said why? I cannot see any criminal offences here. It's not your fault you had the heart problem.

 

[Gary Edwards]

Hi susan (if i may call you that rather than laywer )

Thank you very much for taking the time to reply and apologies for the late reply myself. I haven't been well for the last few days but hopefully over the worst of it now.

I can provide specific details of what took place regarding the partnership agreement. I also have a number of witnesses who will provide testimony that they were aware of the partnership being agreed. I am fairly certain a document was provided at the time by MBP (my business partner) but I am not sure where it is.

The accountant will also be able to verify that to all intents and purposes we were partners. He was actively involved with company matters and would chair a monthly meeting when we would discuss how the company was doing and plan for the future. He was also well aware of the issues between us. He did say to me that MBP was unlikely to ever change (as in being lazy) but hoped we might be able to work things out for the sake of the company. He also chaired the last meeting we had before my heart attack, where the discussions took placeregarding whether I would be bought out, the company dissolved and MBP taking a sleeping partner role. I will speak with the accountant regarding verifying this, but see no reason why he would not do and see this as conclusive evidence that we were partners as had always been agreed.

Sadly, in my absence, my brother who was covering the majority of my role, has now been effectively forced into going off sick with work related stress, solely due to the actions of MBP and is now taking formal action against him in the form of a grievance. He has spoken to ACAS who advised him to take this route. MBP has also informed our client that we may be 'going bankrupt' which led to me having to assure the client we were not, however confidence in the company from the client is now at an all time low.

The workforce are very unhappy at MBP's actions in my absence and are also concerned at the business's long term future. MBP has informed some of them that I have been trying to 'destroy' the company, when I have been doing nothing of the kind. I consider his actions and statements to be massively damaging and am not sure if the company is likely to survive.

The client has expressed a desire for me to start over without MBP, but I do need to have this settled beforehand. I don't believe in acting in an underhand manner and against the interests of my company. However the feedback I have been getting from the workforce and the client is not good at all and I have grave concerns regarding the company's future. His actions in my absence beggar belief. I have little doubt that the company is losing money now as a direct result of his actions and believe the client has lost all confidence in the company. MBP's actions have directly resulted in this and I can also provide testimony from the client

It seems very odd to me that MBP would act in this way. I know he harboured grudges against me, as I did make it clear that his constant negativity towards the company was unacceptable. I did keep him distant from the client and the workforce as his statements and actions would invariably cause issues that I would then have to resolve. He has no real understanding of how to run a business and his sole focus is money. This has been borne out by the fact that he immediately decided to curtail my salary, following my heart attack, and he also has not paid me over 2k I was owed for personal expenditure for materials etc. as well as 16 days holiday pay. All of which thankfully hasn't impacted me too greatly and, I believe, adds to my case. Particularly as he has recieved his salary when off sick and when working on seperate 'projects' unrelated to the company.

His statements of 'having me arrested' is a clear attempt to try and discredit our partnership agreement. Hi accusation that I threatened him and his wife so as to procure a 49% share in the company is a complete lie and therefore I assume libellous? Also to say I was extorting money from the company is also a complete lie. I have never even requested a dividend. He has always informed me that we were due one and then paid it to me. I was happy to leave the money in the company to ensure its solvency, but it was MBP that insisted we take one.

I have recently spoekn with Graham (the resolver) to explore my best course of action. Although I am very angry and upset at MBP's behaviour, I always believe that the truth will prevail and will pursue whatever action available to hold this person to account.

I know from a legal point of view some of the above may seem a little vague, but I am not well versed in these matters. Also I do appreciate the help I have been given on here and am open to options with doing so on a more professional basis (ie payment). It is, however, important to me to ensure I do find the right people for the job, so any assistance in doing so is greatly appreciated.

I do need to bring this to a close as swiftly and effectively as possible, as need to move on for the sake of my long term health and well being. The heart attack has made me re-evaluate my goals and aspirations and I wish to leave this chapter of my life behind me and move on. However I believe that justice needs to be done before I do so.

Thanks for being patient enough to read this and thanks in advance for any help you might give.

Gary