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Directors in dispute what can I do?

Nightmare

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Hi there 

i have a ltd company client with 2 directors. One Director has always been inactive and no involvement with the day to day running of the company and leaves it up to director 1.

During the year the director running it has set up a new company and has transacted with the company. Invoices raised and paid - deemed to be at arms length. The reason for the new company set up was that although providing similar services, it is providing a specialised type of service.

now we are coming to the year end, the director who doesn't get involved is now disputing this - that he wasn't aware etc and the accounts work is going to come to a stand still. 

i feel the related party transactions are at arms length and the director set up the new company as it is a specialised area and the other director/shareholder has had no involevement in the company at all. 

The other director is also not happy he was not consulted re the director salary and provision of company car (which is not actually excessive at all)

any suggestions as to what I can do with this to love things along? All related party transactions disclosed etc.

many thanks 

Replies (13)

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Out of my mind
By runningmate
26th May 2020 20:58

Tell them both there is nothing useful you can do until they have reached agreement on their dispute.
Then focus on work for your other clients.
If you get involved they will both hate you for it.

Thanks (0)
Psycho
By Wilson Philips
26th May 2020 21:54

Nothing to do with you. If anything it’s a legal matter. But perhaps it will alert the injured party to his responsibilities etc as a director and encourage him to take a bit more interest in the future.

Thanks (1)
RLI
By lionofludesch
26th May 2020 23:29

Collect your fee and leave them to us.

You're an accountant. Not a referee.

Thanks (0)
Replying to lionofludesch:
Hallerud at Easter
By DJKL
26th May 2020 23:35

Quote:

Collect your fee and leave them to us.

I think a typo, possibly "us" for "it", may have slightly laced your post with a subtle menace.

Thanks (4)
Replying to DJKL:
avatar
By Tax Dragon
27th May 2020 07:10

Sort it aht or I'll send the accountants round. (They've got scary names like Lion and Dragon.)

Thanks (3)
Replying to Tax Dragon:
Hallerud at Easter
By DJKL
27th May 2020 09:01

A fate worse than death.

Thanks (0)
Replying to DJKL:
Lone Wolf
By Lone_Wolf
27th May 2020 10:27

Given the choice between a severe beating from the heavies, or debating the semantics of tax legislation with a bunch of accountants, I'd wager most would take the beating.

Thanks (1)
Replying to DJKL:
Stepurhan
By stepurhan
27th May 2020 14:40

DJKL wrote:

I think a typo, possibly "us" for "it", may have slightly laced your post with a subtle menace.

I prefer the typo in the OP, asking what they can do to "love" things along.

Though maybe they did mean that they wanted there to be more love in the world. A noble aim to be sure.

Thanks (1)
Replying to stepurhan:
RLI
By lionofludesch
27th May 2020 14:41

Was that a typo ?

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avatar
By Calculatorboy
27th May 2020 01:29

Yep , as everyone says , it's not your problem , just make sure you get paid , and when that's done , personally I'd disengage ..

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avatar
By bernard michael
27th May 2020 09:12

What is the shareholding split ?? If it is different from 50/50 that may show you the way forward

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Replying to bernard michael:
Flag of the Soviet Union
By thevaliant
27th May 2020 09:51

Regrettably you are right. Whenever we have encountered.... uhhhh.... shareholder difficulties.... our firm can always be trusted to come to the aid of the party that really pays our bills.

((And whisper it quietly, but I suspect most firms are like this too))

Thanks (0)
By ireallyshouldknowthisbut
27th May 2020 11:36

To take a different tack you have two options

(1) Hide in the corner
(2) Try and facilitate an agreement

(2) is hard, and if you enter into this ring you clearly need to agree terms for this, and very importantly your aims. You may have to "pick a side" or you may be able to be "independent" albeit as above independence will probably be influenced somewhat by who pays the bills. You key role is not to make decisions, but frame key points and questions in a non-confrontational manner. You may be able to talk "in confidence" to both sides to mediate, find points of difference and points of agreement. If you do this, you need both sides buy in that you are going to do that. Often what annoys one party is a low priority to the other so compromises can be reached. Usually the root of all of this is expectations being badly set at the start, and both sides thinking the agreement they have is not the one the other side thinks they have. "What are your expectations of the business arrangements?" is the key place to start.

I have done (2) a couple of times, and its a real slog, but if you get it right you have a client for life for standing up when they need help.

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