Help with Company Issue

notts00

I am hoping someone can give me advice regarding an issue I have with my ltd company.

Myself and 2 other directors started the company 30 years ago, but 3 years ago I stopped playing an active part due to illness (The 3rd director has also left to pursue other interests), but we still have our 1/3 shareholdings each.

The remaining director is running the company, but has setup a further limited company which he is running off the back of our company and utilising the manpower of our company at minimum or no charge for this being paid to our company. The company he has setup is undoubtably running for almost free and utilising our customer base for sales which are closely linked to the main activities of our company.

The active director has offered to buy our shares in the company, but his offer does not take into account any payment for the client database from which there are substantial recurring annual revenues. Since I left the company the expenses have increased significantly with little now left for annual dividends to myself and the other director. (when we were actively involved we were on higher rate tax).

I appreciate that I should be seeking legal advice, but I would appreciate any views how we stand given this situation.

Thanks for any help.

Undervalued

notts00 wrote: »

I am hoping someone can give me advice regarding an issue I have with my ltd company.

Myself and 2 other directors started the company 30 years ago, but 3 years ago I stopped playing an active part due to illness (The 3rd director has also left to pursue other interests), but we still have our 1/3 shareholdings each.

The remaining director is running the company, but has setup a further limited company which he is running off the back of our company and utilising the manpower of our company at minimum or no charge for this being paid to our company. The company he has setup is undoubtably running for almost free and utilising our customer base for sales which are closely linked to the main activities of our company.

The active director has offered to buy our shares in the company, but his offer does not take into account any payment for the client database from which there are substantial recurring annual revenues. Since I left the company the expenses have increased significantly with little now left for annual dividends to myself and the other director. (when we were actively involved we were on higher rate tax).

I appreciate that I should be seeking legal advice, but I would appreciate any views how we stand given this situation.

Thanks for any help.

Unless you can sell your interest in this to anybody else then surely it is only worth whatever he is willing to pay for it? Can you?

Also, unless you are suggesting the expenses are being manipulated so as to devalue your return then they are what they are. Assuming it is being done legally then you can't really complain about how it is run if you choose not to take an active part.

notts00

We can of course look to sell the company to a competitor, which would be attractive with the long established customer base and recurring revenues (£100k+ p.a.) and fixed assets of a similar value. Manipulation of expenses is happening with work being undertaken by the main company, but invoiced by newly setup company with in most cases no charge for this being made. The newly formed company is also utilising office space, IT, phones, postage etc. for no charge.
I am only out of the day to day running due to long term illness.

steampowered

As you and the second director presumably hold a majority of the shares, you could pass an ordinary shareholders resolution removing the 3rd director from the board, and cancel any arrangements with the newly formed company.

You could also sue the 3rd director for breach of his fiduciary and statutory duties as a director if he is not acting in the best interest of the first company or is creating a conflict of interest situation.

Though the cleanest option would be to negotiate the price with the 3rd director.