Problems with Business Partner

dan123

Hi All,
I just wanted to share a problem I am having with a business partner. I really need some sound advice. I am involved in a business in Ireland with 2 partners. We also employ 3 other staff. Things have been going quite well since we started 4 years ago, although business has fallen off 20 % since the recession kicked in. Anyway I am having problems with 1 partner.
They are saying that I am not pulling my weight as a director/shareholder. I totally disagree and was taken aback by this. They feel that I am not capable of been a director and it isn't that I dont put the effort into the business, its just that I dont have it in my character to be a Director according to this person.
This person has the title of Managing Director and also hold shares(40%).
I hold 25%. I feel as if I am been picked on. I have several questions I need answers to.
1. Have they any powers over me or the other director because of their position of managing director.
2. Can they force me to step down for my directorship.
3. Will my shares be effected if I am no longer a director.

They also told me that my shares would have to be looked into as I wont be a director and my salary will be cut. Can they make these decisions without my input. It all feels incredibly wrong and is really stressing me out. I get the impression that I am also been kept out of the loop with regards to decision making, finances etc.
The person in question has told me that I dont need to know all that goes on in the company and that I will be informed on a need to know basis. They also told me that they will be making all final decisions when it comes to the company. They are been critical of the way I do things and pulling me up on certain issues.
If there is anyone out there with knowledge and experience regarding this topic, could you please shed some light onto it for me as I am at wits end.

Thanks for reading my jumbled post, hope it makes sense

Dan 123

soddy1979

Couple of things stand out immediately.

1. The managing director does not have power over you, as a shareholder, because of his title.

2. However, they can nominate for you to be removed from the board of directors (just as you can nominate for them to be removed). I'm not sure if a simple majority of votes would be enough to get you removed, but it might be, depending on the way the shares are set up.

3. Your shares would not be effected.

It sounds fishy if the directors are telling you, as a shareholder, that you will be told things on a need-to-know basis. A couple of questions you should ask yourself.

a) Are the other directors putting in much more effort than you? Don't be defensive on it, think realistically. If they are, is it fair that you are compensated equally?

b) If you are in fact all putting in equal effort, why are they now trying to ostracize you? Think critically - is this sudden or has it been coming (and you have been blind to it). If you think you are unfairly being forced out, I would advise you to try and find out the real reason.

USER X

In my opinion you should seek legal advice immediately from a good solicitor. They will be familiar with company law without the if, buts or maybe's you will receive from someone trying to offer advice. They will also be able to advise you of how you can put yourself in the best legal position. Once you know your entitlements, position and all the facts have been straightened out, it might be time to sit down for a word with the other director. It doesnt seem right/correct to me the way they are trying to sideline you. As a director and shareholder, I think you should be entitled to know exactly what the business is doing but again the best person to ask about this is a solicitor who is familiar with Company Law.

Good Luck,
User X

dan123

Thanks soddy for your time and advice, do you know if I can be forced out of my shareholing?

dan123

Thanks user x, sound advice! I agree the legal route is the best option

TheCostumeShop.ie: Ronan

I seriously doubt they can force you out of your shareholding after all you own a portion of the company, unless there is a claus written when the company was formed that means the can opt to buy you out at market value etc.

As a company director your required to know whats going on for legal reasons as your responsible for the company.

When they say look at your shares they probably mean making an effort to buy some or all of your shares.

tomED

TheCostumeShop.ie (Ronan) wrote: »

As a company director your required to know whats going on for legal reasons as your responsible for the company.

100% and you should make that very clear to them. For example, if the company was to be found in breach of company law, you would be liable to prosecution as much as them. So you MUST demand that you are part of the decision making.

padser

dan123 wrote: »

Hi All,

1. Have they any powers over me or the other director because of their position of managing director.
2. Can they force me to step down for my directorship.
3. Will my shares be effected if I am no longer a director.

As already said - you really need to go talk to solicitor. Your position will be heavilty dependent on the articles of association of your specific company. Without them its impossible to know exactly what your position is.

However its likely that with 75% of the voting shares they are able to remove you from the board (but not definite - again consult articles of association)

It is not possible (at least I can't think of any way it could be possible) for your shareholding to be effected.

Once again - this one is very dependent on the articles of your individual company - I suggest bringing them to a solicitor.