Share holder advice

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Mat B

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Can anyone advise me what rights a non majority shareholder has in a limited company.

The company has one director (me)

And two share holders
One with 51% (me) and the other with 49%

I keep seeing money going out, like payments to people (his wife) and new vehicles. I've not authorised this and want to know where i stand before confronting.

Thanks in advance
 
is your partner the company secretary, or named in the memorandum of association?

i take it that for what ever reason you have allowed them to be a joint signatory on the company bank account.

first strategy: talk to the shareholder and ask them to explain what the hell they're doing as it will be contra to company articles, and the funds aren't theirs to take. A shareholder can only receive a dividend that has been declared at an interim meeting by the company officers

next step: ask them in writing to refund the company funds. write to the bank and stop them being a joint signatory.

extreme strategy: open a new corporate bank account and change invoicing details. stop the corrupted account. sue the shareholder for defrauding the company. start a new company

company law reading here > http://www.companylawclub.co.uk/top...ence_between_shareholders_and_directors.shtml
 
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Not a lawyer, but legally speaking a shareholder has no executive powers regardless of their stake.

Shareholders can appoint Directors, but ultimately decisions are made by the Board, and not by the Shareholders.

There are certain decisions for which shareholders approval is required, such as selling off substantial amount of assets, or where the Memurandum specifically requires Shareholders approval, but definitely not when it come to day to day payments.

Other than that, shareholders can express their wishes through AGM or EGM, but that's about it.

If your partner is making payments from your company's bank account, it is simply because he can (i.e. he is signatory to the account), and not because his position as Shareholder permits him to do so.
 
Is he employed by the business?
 
The only other signatory is my office manager. I've just been checking and these payments are actually being made via the payroll.
I use a factoring company who tie all the money up and only release it when I request for each pay cycle and direct debits. So I guess this is their way around getting money.

I think the extreme strategy is the way forward to cover all the bases.

Thanks again.
 
You as the Company MD are the only one who can make the day to day decisions of the company unless you have given permission to a member of staff regardless if they are share holders, however this changes at egm or agm meetings as although they are in a minority they have a enough of a holding to appoint a director on the board.

You do not state what there appointment and yours is in the company,

What i would do is call a EGM with your accountant present to miniute the meeting and ask them to explain what they have been up to in removing company funds and then take apropiate action.

Sorry for any mis spels but have lost glasses and im guessing
 
Is he employed by the business?

Yes on an ad hoc basis. Will have to check through contracts then see what other benefits are being received as well as dividends, and PAYE salary etc.
 
You as the Company MD are the only one who can make the day to day decisions of the company unless you have given permission to a member of staff regardless if they are share holders, however this changes at egm or agm meetings as although they are in a minority they have a enough of a holding to appoint a director on the board.

You do not state what there appointment and yours is in the company,

What i would do is call a EGM with your accountant present to miniute the meeting and ask them to explain what they have been up to in removing company funds and then take apropiate action.

Sorry for any mis spels but have lost glasses and im guessing

Thanks it was my meeting with my accountant Friday to go through filing my years books that I discovered this.
 
Hi sorry forgot to update

Basics were it was all part of old contracts and agreements.
New ones have been written and agreed on and it now doesn't happen anymore.

Thanks for all those who Inputted
 
^ I bet that went down well.
 

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