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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 7265
Experience:  28 years as a practising solicitor.
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I have am a 1/3rd owner of a limited company that has been

Resolved Question:

I have am a 1/3rd owner of a limited company that has been trading for 4 years. I feel I am being pushed out of the company by the other 2 owners, what can I do or how can I protect my interest? Can I be forced to sell by share?

My worry is that; if I don't sell my share or don't agree with them, they will just setup another business and lit the current company fade away.
Submitted: 1 year ago.
Category: Scots Law
Expert:  JGM replied 1 year ago.
Thank you for your question.

What kind of company is it? What type of assets are there?

-Could you explain your situation a little more?

Customer: replied 1 year ago.
Helle there,
The company sells and distributes diagnostic glass and vials and rapidiagnostic strips ( similar to pregnancy test strips, used for such things as testing HIV, malaria and STD's) which mainly sell to 3rd world countries.

The company last year (yearend April 2013)
Turnover of £407,000
Assets £117,000 stock, bank £42,000 + few fixed assets like computers and walki-in fridge ~£5,000
Profit £30,000

Premises are rented


Expert:  JGM replied 1 year ago.
Are the other two shareholders also directors. Are you a director?
Customer: replied 1 year ago.

There are 3 shareholders in the company of which all 3 are directors. We each own 1/3rd of the company equally.


 


I have a full time job in another company, therefore I don't take a wage (trying to grow the company by keeping money in the business)


The other 2 directors work as sole employees


Director/shareholder 1, (operations) works 5 days/week for £2500/month


Director/shareholder 2, (accounts) works 3 days/week for £1500/month


Director/shareholder 3, (myself, technical) no wage


 


We also have 1 person working for us as sales, but on commission only (not employed)


Just taken on 1 new member of staff this week full time.


Occasionally we employ some temp staff for packing.


 


 


Out of the 5 people now working in the company including myself, it now appears 4 of the 5 all worked for the same company in the past all within the last 18 months. I now feel the non-contributing outsider being excluded more & more such as emails and meetings.


 


I was offered to be bought out of my share for £20k (pre-tax), I think this is below the true value of my 1/3rd share.


I feel if I don't take it, over time I will be pushed further out and become more excluded and if I push the value there is a possibility they could just setup another company, move the assets and let the current company fade away to zero value.

Expert:  JGM replied 1 year ago.
They could not legally transfer the assets. The office bearers have a fiduciary duty to the company to act in the best interests of the company and all the shareholders. By assets I include the employed staff and the customer base.

Your remedy as a minority shareholder would be interdict and damages.

It is still not a nice situation to be in. You should have your solicitor or other adviser read the Articles of Association of the company and see what the provisions are for an exit by a shareholder. Normally the company would be valued and the shares offered for sale to the existing shareholders in consideration of their true value.

I am also concerned that you are not taking a wage. Is there a shareholders agreement to this extent. Do you have a directors loan account which is being credited. It appears to me that unless there is some kind of reservation, the company's income is going to the others and there may be a situation that you are not getting any benefit other than, presumably, a marginal increase in share value to reflect cash retained.

Happy to discuss further.
Customer: replied 1 year ago.

I have to admit, I don't know of "Articles of Association" is it something we must have or is it something that's just a good idea to have, the same goes for " shareholders agreement"? I am only asking because when the company was originally set-up, it was just done 1 evening over a drink.


 


The only monies paid between all 3 of us is a dividend’s which have been set-aside


 


As a director and shareholder do I have the rights to see all communications being passed about the company like emails, bank meetings that I am being excluded from.


This all started when I found to be excluded from contracting a new website company. From which I have been excluded from all communications, meetings and first views.


 


The other thing I found strange last night, was I asked for a phone bill that was going to my house instead of the company to be changed, this has now been changed, but notice the change document has had my signature forged by our accounts director, as I never seen or signed the form.


 


Thank you for your help so far with this matter, you have been a great relief & help,


 


Adam.

Expert:  JGM replied 1 year ago.
Every company has Articles. They are the company's rule book.

Not every company has a shareholder's agreement. You would remember if one had been done.

As a part owner of the company you are entitled to see anything to do with the company.
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 7265
Experience: 28 years as a practising solicitor.
JGM and other Scots Law Specialists are ready to help you

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