Valuation of a business

BartyBoy

*~Zephyr~* wrote: »

If you want a valuation, speak to the company Accountants...

I briefly mentioned my plan to the admin person here, she told me not to go to the company accountant as he will act the best interest of the company, so his valuation will be lower. She told me to go with an independent one and said she would give me a helping hand for 'necessary info'. When I asked her for some general info of the business, she now said she didn't have them anymore, that is how dark my company is!

steampowered

Undervalued wrote: »

Apologies if I am out of date but I think you will find it needs more than a simple majority to remove a director. "A resolution in writing signed by all of the other directors" rings a bell.

The model articles of association for private companies say that a director can be appointed by an ordinary resolution of the shareholders OR by a majority decision of the board of directors.

Under the Companies Act, a director can be removed by an ordinary resolution of the shareholders, which requires a simple majority.

However these are only default positions. It is common for shareholders agreements and customised articles of association to state higher approval thresholds.

MacMickster

Simply look for another job, but keep your shares in the current company.

You will still be entitled to the same dividend per share as the other directors, but will be able to look elsewhere for the salary that you consider you deserve.

motorguy

BartyBoy wrote: »

I thought of that option before, but the back of my mind keeps asking the same question – what makes me get £5K less a year while I am doing more or less the same as the other directors. I have already earned min. £30K less than the other directors in total of the past 6 years. Despite the fact that I told the other directors I am not happy being underpaid, they still have the cheek to pass me more and more work to do.

So what is your job title and why do the other directors feel they can just pass work to you to do - presumably thats outside of your remit?

Do you feel you are underpaid relative to market rates for your job or just relative to other directors?

Undervalued

steampowered wrote: »

The model articles of association for private companies say that a director can be appointed by an ordinary resolution of the shareholders OR by a majority decision of the board of directors.

Under the Companies Act, a director can be removed by an ordinary resolution of the shareholders, which requires a simple majority.

However these are only default positions. It is common for shareholders agreements and customised articles of association to state higher approval thresholds.

Thanks.

The situation I was thinking of was slightly different in that it was a company limited by guarantee (an association with thousands of members). The directors were elected by the members but an individual director could be removed by a resolution signed by all of the other directors.

So not really relevant here although, as you say, the company could have rules that are more demanding than the legal default.

Which brings us back to the main point that the OP needs to properly understand the Articles and any shareholder agreements.

theoretica

I guess the other point is if the other shareholders dislike you enough you could say you would be open to being bought out and leaving and see if they could be persuaded to make a high offer to get rid of you.

BartyBoy

motorguy wrote: »

So what is your job title and why do the other directors feel they can just pass work to you to do - presumably thats outside of your remit?

Do you feel you are underpaid relative to market rates for your job or just relative to other directors?

The other directors passed me their jobs because they said they were stacked, but they never asked me if I was also stacked with work or not before passing me the jobs, they see me as a dog body if I am being honest. In the past, I would just accept these extra jobs cos I thought we worked as a team. But now, when it comes to salary, they don't quite seem we should be as equal as a team. If I can manage to do whatever they pass me to do (their jobs), it shows that I am just as competent as they are, so what makes them think I should earn less, that is just pure selfishness.

I did check with a recruitment agency, they say I can get £5k more a year if I do the same job somewhere, but obviously I won't receive any dividends as a staff from the next company. This is what the other directors use to cap my salary. They say the current money that I am receiving, I will not be able to get it somewhere. I was really shocked when they use this reason to cap my salary, rather than claiming I was lazy, or I made lots of errors, or I made losses on jobs, etc..

TBagpuss

OK, you have two separate relationships.

You are a shareholder, which means that you have a right to dividends based on your shareholding.

Then, you are an employee of the company, and in that capacity you are paid a salary. There is no general requirement that you should be paid the same salary level as other directors, so I would suggest, in seeking increased pay, that you don't argue on the basis that you are paid less than the other directors, but that you are being underpaid for the job you do. Provide evidence of the job you are doing, and the open market rate for someone with your expertise and experience.

I also think it would be reasonable to ask for clarification on the statement that your salary is capped - and whether there are also caps on the salaries of other directors.

If you leave as an employee, then it may be that the Shareholders agreement sets out what will happen, and in particular, whether you are entitled to continue to hold your shares and draw dividends, or whether you can be required to sell your shares, and if so, whether there is a set method for valuing them.

BartyBoy

TBagpuss wrote: »

Then, you are an employee of the company, and in that capacity you are paid a salary. There is no general requirement that you should be paid the same salary level as other directors, so I would suggest, in seeking increased pay, that you don't argue on the basis that you are paid less than the other directors, but that you are being underpaid for the job you do. Provide evidence of the job you are doing, and the open market rate for someone with your expertise and experience.

That was what I was doing when I asked for a salary review. I tried to focus on just myself only. I explained my skills, experience, roles and responsibilities have changed throughout those 6 years. What I am doing now is much more different to what I was doing 6 years ago. Despite the fact that I was trying to be honest and fair, I was told to focus on making profit for the business instead. I simply don't think that is the answer for my salary review. This is why I say I plan to leave on my very first message and wanted to know how to work out the value of my share. I have no faith on working with this lot of people.

motorguy

BartyBoy wrote: »

That was what I was doing when I asked for a salary review. I tried to focus on just myself only. I explained my skills, experience, roles and responsibilities have changed throughout those 6 years. What I am doing now is much more different to what I was doing 6 years ago. Despite the fact that I was trying to be honest and fair, I was told to focus on making profit for the business instead. I simply don't think that is the answer for my salary review. This is why I say I plan to leave on my very first message and wanted to know how to work out the value of my share. I have no faith on working with this lot of people.

So if you leave, and go somewhere else as an employee, not a director and they buy your share out

• You "might" get the salary difference
• You will lose all dividend payments

You seem to have alienated yourself from all the other shareholders / directors.

I cant help but think this isnt going to end well?

I kind of see their point. Being a "good employee" is very different than driving profit for a company as a director / shareholder.