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Client in dispute with fellow director

What can be done to resolve

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Limited Company two directors around 6 months old: The company business activities is installing broadband for their clients

A: 55% Shareholding

B: 45% shareholding

I am advising A

Company was setup on the premise that B would bring 15 clients and world install the broadband which involves going on their clients roofs.  A would be involved with the technical setup and operations plus provide some investment.  No Shareholder/Directors agreement in place - everything agreed verbally

A is doing all the work and putting all his money to fund the company as since it is as startup a lot of investment is required,  B was suppose to contribute but says he cannot afford to.  B is really doing nothing in the company and is also scared of heights so cannot even install the broadband.  B only conribution so far is 15 customers but all of them had to have their broadband equipment replaced so currently making losses on them,

B now wants access to the book-keeping and the bank account which A does not want to give. A wants to decrease B shares to 20% but will not be possible without B agreeing.  A cannot afford to buy B out at the moment.

Does B have the right to the bank account and book-keeping.

 

 

 

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10th Jul 2018 09:58

Yes - he's a director.

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10th Jul 2018 10:29

As lionofludesch says - he's a director and has every right to access the accounts. He can access the bank accounts to see the records, but if A has any sense, he'll ensure that any expenditure or withdrawals need the majority shareholding director's signature.

However, you say you are acting for A. This implies that either there is a separate accountant for the company, or no accountant has been appointed. So B has no right to demand the information from you, it has to come from the company or company accountant. Pragmatically, in the case of a small and new company like this, that means A has to authorise you to pass the information to B - I'd definitely get it in writing !

From what I read of the question, the company was set up on a nod and a handshake. It might be worth advising A to see a solicitor specialising in Company Law to either get it set up properly, or to dissolve it quickly but in the correct way if the relationship between the directors has gone south this early on !

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10th Jul 2018 10:30

Yes, what lion said.

So A goes into business with B on the understanding that B will do the height work not knowing that B is afraid of heights. Forget the stupidity of not having a shareholder's agreement, it's a mere trifling omission in comparison.

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10th Jul 2018 10:40

Ditch the company. Start again. Next.

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to Red Leader
13th Jul 2018 17:06

I am with you red leader....

Wing Man

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10th Jul 2018 11:26

GlobalTax wrote:

two directors around 6 months old: 

Surely that's not legal??

Thanks (4)
to Accountant A
13th Jul 2018 12:43

The directorships are held in trust by a witch doctor in Haiti. It will be ok :)
Haitian tax code 1897 S345 a 2 (iii)

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10th Jul 2018 13:10

You ask a lot of questions don't you...?

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to JCresswellTax
10th Jul 2018 14:52

JCresswellTax wrote:

You ask a lot of questions don't you...?


Well, there are a lot of questions in global tax.
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to Red Leader
13th Jul 2018 12:44

Global? You didn't say the company was offshore?

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