Company problems

What does your contract say? You do have one I assume?

I dont' see how he can obtain your shares unless you put them up as security for the loan or they are part paid shares.

Neither of us have a contract.

Many thanks for your reply. It makes me rest a great deal. However isn't he a creditor and since he is owed more than the company is probably worth, can he not just serve a statutory notice?

How is the company paying this income if it doesn't have any money?

If the income that you receive is connected to the share then the company shouldn't be paying you this if it can't do so from income.

This will only 'gain' your share if there are no other assets to sell first in which case he will have a share in a worthless company.

You are a shareholder. Whilst the company has assets you are entitled to a share in those assets. OTOH if the company really is broke then you have a shareholding in nothing of value.

But, if you are also an employee and receiving a salary, he can sack you (make you redundant or whatever) independently of taking your shareholding away from you.

hth

tim

I agree with that, but he can presumably insist of payment of his loan, which is payable on demand in the absence of contrary agreement, and he can then present a winding-up petition if the company does not pay. That screws the company totally and gets him probably some part of his loan in the winding-up. It also destroys the OP's business.

So if the other director says in effect ' give me your shares and walk away and I will stop trying to enforce' the OP may not be in a strong negotiating position.

Andrew McGee

What did the directors put up as collateral to the Bank, if at all.

It strikes me if the OP does not have any major personal assets invested in the company, if his co-director wants to get stroppy, let him have the debt ridden company and walk away.

On the other hand, if the debts of the company are secured over any assets of the OP and the co-director, they will have to look again. This may involve limiting the directors fees or salary in proportion to the companies income as has been suggested.

We have no overdraft or borrowing facility. The only loan is from the other director to purchase stock and to provide working capital.

The company still produces a modest profit but only just at the rate of my remuneration and I am presently unable to work full time. Income has been mostly dividend though as such we haven't had official meetings as such to distinguish between income and dividend.

Obviously I can hold out until a winding petition has been sent to the company by the other director. If I do can I be held persoanlly responsible for increasing costs by not agreeing what is in effect a take-over?.

You are a director and should not draw monies which would put the company into financial difficulties. I would stop drawing the money.

On the surface it seems as if you are doing little and continue to take money from the other director. I'm not surprised at his stand. Why don't you match his investment? A company loan would also attract tax relief on the interest.

indeed, if you are so unwell you should be drawing sick pay...

If he is owed money by the company then he must first of all demand repayment according to the terms of the loan agreement. If no loan agreement then I guess it is repayable on demand. It then becomes the company's problem to repay it, not your personal problem. It's only a problem for you if you owe the company money, because the company can demand you repay it. Of course if the company can't repay him then he can sue for it. Ultimately he can force the company to cease trading, if he is willing to spend the money on it, and then your shares are worthless:-(

Agreed, but there is no benefit in doing that.

I doubt it.

If you havent had meetings to distingush between dividends or not have you put your income through the payroll or issued dividend vouchers?

You are storing up a lot of trouble.

You seem to want to do little work and take money out whereas your co-director is having to put money into the company. It doesnt seem fair to me.