Hello. I have a new client (which sadly will be closing down soon), and am finding various problems in prior year accounts completed by friends of the client for free...
Most notably there is a shareholders' agreement stating they each subscribed £7,000 for one share each in the company. Yet the accounts show a share capital of £2, no share premium and short term loans of £14,000. Having checked the documents filed with Companies House, they support the accounts, i.e. the share capital is listed as 2 £1 shares with £0 paid up. The shareholders consider their investment to have been capital and not a loan (but clearly didn't check or didn't understand the accounts). My question is, does the shareholders' agreement (and the directors' intent) take precedence, making filings to CH incorrect, or do we have to assume CH filing is correct and so that part of the shareholders' agreement is void? Thanks!
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Negligible value claim
Is it a trading company?
If so you may want the shares to have been issued at the higher amount.
Well the shareholders' agreement falsely asserts that something was the case when it was executed that clearly wasn't. Matter for legal interpretation perhaps but I would have thought that the shareholders' agreement would have be construed as being void to the extent that it provides for arrangements regarding shares that were purely imaginary.
Something clearly went calamitously wrong with the due diligence of the shareholder who lent more money later in reliance on ranking ahead of the £14,000 already in the company. If he took professional advice on that perhaps his advisers should be dusting off their insurance policies.
There is of course nothing to stop the company issuing 13,998 new shares now. Presumably this is not happening because it is not in the interests of one of the shareholders to give up his rights as a creditor. So you have a shareholder dispute?