Trapped as director in limited company

WreckingRalph

As a follow-on to this thread ..

Nuts and bolts: co-founder of my company took money from the bank account and when I confronted him about it, he emptied the bank account and (unbeknownst to me) resigned as director of the company by filing directly with the CRO (so he didn't give a formal letter of resignation).

The situation is now as follow:

• His reason for taking all the money is because he claims he gave the company a loan (before I joined and we rebranded) but I was not made aware of any "director's loans". I requested from him (by means of registered post) to provide me with details, accounts, agreements, audit logs etc of proof/evidence of this, but he is yet to respond (it has been a week), as the company had no bank account or accounts prepared - the company didn't trade.
• I have requested that he provides me evidence of the share certificates
• Because I am new to the company, and haven't updated our 50/50 shareholding with the CRO yet, he is currently listed as the only shareholder (needs to be updated on the next filing, but the company constitution also needs updating so unsure if I need him for this)
• By emptying the bank account, he left the company with no money to file a B1 with the CRO because of the due ARD. I am trying to see if this can be postponed now
• I am the only director in the company, but think that I cannot wind down the company because he won't agree to it (think I need 75% approval by means of a special resolution)
• Advice given so far is that is that commercial litigation is too expensive and probably, considering the age of the company, not worth pursuing.
• After he "resigned" from the company (and accordingly registered with the CRO), I accessed his company email (as I am the administrator) only to discover that he has been involved in undisclosed business deals under the company name, and was engaged in a similar business since the beginning of the year with another partner.
• I have subsequently managed to remove his access to the bank account as he no longer is a director
• Company has no debt, but obligation to provide services to customers for which they have paid.

I feel like I am trapped because I won't get him to agree to anything (winddown etc), yet if I am to continue honouring our customers, he will be entitled to dividends of the profits. He has been a complete wrecking ball to the business, and I can't resign because I am the only director. Without proof of his shareholding certificates, can he be expelled as a shareholder?

I understand that opinions given here are not legal advice, but I'd appreciate your thoughts on what actions I can consider next.

Glass fused light

You need to pay money from your personal funds to get proper legal advice. You are looking for advice which has to be legal advice as you have legal obligations which you need to comply with.

If the company has no cash and can't generate cash it's not viable and you must as a director stop all activity immediately.

Has the company issued new shares and not filed? So if you may or may not be a legal shareholder. Either way your best option is to look to extract yourself from the business ASAP and find a commercial solicitor who deals with liqudation and directors malfeasance who will help you to leave. A good accountant will explain how profits are calculated and if the company owes the services to the clients, ie debts.

IMO you need to let the business go and look to extract yourself. Only once you stop trying to save the company can you look to save yourself.

WreckingRalph

Glass fused light wrote: »

IMO you need to let the business go and look to extract yourself. Only once you stop trying to save the company can you look to save yourself.

I realise this, but I just don't know how. As the current shareholder won't agree to wind it down, and I can't resign as a director.

Also, the company issued new shares but wasn't filed with the CRO (nor can I see evidence that he filed his own, apart from reflecting this on the initial B1)

hullaballoo

It's time to lawyer up and treat the situation like the emergency it has become. I deal with stuff like this all of the time, at this point the only real option is legal proceedings.

I can't stress this enough, you need to speak to a lawyer with experience in this area today.

Glass fused light

As Hullaballoo posted start looking for proper assistance today.
This could impact your future ability to be a director. But more importantly you could end up personally liable for all and any costs arising from the company.
In this instance I would suggest that you look to personally borrow money if you dont have savings to pay for the legal advice.

WreckingRalph

Glass fused light wrote: »

This could impact your future ability to be a director. But more importantly you could end up personally liable for all and any costs arising from the company.

Thank you.

If you don't mind me asking, how could I be personally liable? Assuming the company has no debt, isn't the directors' liability limited?

WreckingRalph

Would there be any point in reporting him to the ODCE?

hullaballoo

Almost as a matter of course these days, directors are restricted when a company goes into insolvent liquidation.

Glass fused light

WreckingRalph wrote: »

Thank you.

If you don't mind me asking, how could I be personally liable? Assuming the company has no debt, isn't the directors' liability limited?

If the other director has been running around doing stuff behind your back and is claiming that there is preexisting loans etc you have no idea what can pop up out of the woodwork, and you can't rely on the books and records you have access to showing you the whole picture.

This is one of the reasons you need to get professional help.

Edit you loose the protection of the company's limited liability it you continue to trade without the company having the ability to pay amounts owed.

nuac

Mod
You urgently need advice from a solicitor experienced in that area - now.
Closed in your own interests