getting rid of shareholder/director

viztopia

I loaned money to my brother and his wife to start up a business, a limited company (€150,000). this was the only money to get the business up and running. They have since split up and are at each others throat. as a result the business is suffering. I am worried for my investment as they arent able to see that it is my money invested. I have no involvement in the day to day running of the company but i think if we get rid of my brothers wife we could make a good go of it. the shareholdings are my brother 40%, his wife 40% and me 20%. as part of the agreement i was to hand over my 20% shareholding when they were able to pay me back. I have spoken to some about company law and they have told me that we need 80% of the shares to vote her off the board etc. is there any other way that we can get rid of her? also she is getting a wage from the company but not working. how do we stop this? do we have a right to stop this?

W!zard

You can get an independent person to step in to have a meeting with all shareholders to try sort something out. You can stop wage but you need to become a director as well, not just a shareholder and you only need one existing director to sign you in. Move the money to another bank account as the two new directors with only your signing (she can request to see the balance but can't redraw without approval).

Or simply setup a new company, and liquidate the existing company where you can demand such a move as the main shareholder who has put in the funding. Make a go of it with your brother in the new company then if you wish.

Make sure if she is taking a Wage / Salary is correct, the accountant might have it under as a Directors Loan. Meet with the Accountant and see if there is any grounds for misconduct.

My advise is not 100% correct, you should follow your legal / accounting advise as you know. But these are a few ideas for you to consider as I am sure other members here will voice theirs.

Best Wishes.

GerardKeating

viztopia wrote: »

I loaned money to my brother and his wife to start up a business, a limited company (€150,000). this was the only money to get the business up and running. They have since split up and are at each others throat. as a result the business is suffering. I am worried for my investment as they arent able to see that it is my money invested. I have no involvement in the day to day running of the company but i think if we get rid of my brothers wife we could make a good go of it. the shareholdings are my brother 40%, his wife 40% and me 20%. as part of the agreement i was to hand over my 20% shareholding when they were able to pay me back. I have spoken to some about company law and they have told me that we need 80% of the shares to vote her off the board etc. is there any other way that we can get rid of her? also she is getting a wage from the company but not working. how do we stop this? do we have a right to stop this?

If an employee is not doing their job, thy can be dismissed for cause, but that the fact that she is the ex-wife complicates it, she might consider the wage a form of maintaince... You might even find your brother agreed to this.

viztopia

I have taken the following from the ODCE website which is based on company law. Do you think it is a matter of checking the memo and arts and then if passing an ordinary resolution by simple majority to remove the director?

"The members of the company are empowered to dismiss or remove a director by passing an ordinary resolution by simple majority. Where a director is appointed for life by the memorandum or articles of association, such a director can only be removed if the correct procedure for the alteration of the memorandum or articles is followed"

dbran

The procedure to remove a director is contained in s182 companies act 1963.

http://www.irishstatutebook.ie/1963/en/act/pub/0033/sec0182.html#zza33y1963s182

Removal as director is relatively easy so long as you follow the correct protocall.

Getting rid of her as a shareholder could prove more problematic and would require buying her out.

Remember directors are required to always act in the best interests of the company so everything needs to be done in an fair and up front manner and not underhand ie secret or restricted bank accounts, etc

Hope this helps


Dbran

niceirishfella

All of the above is why I never do business with Family.

conolan

Essential you become a director. Then you and brother can legally stop the wage (at risk of unfair dismissals).
Probably best way to get her co-operation is to promise buyout or regular income provided company reaches targets. Then at least she might have same interests as other directors.