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Is a majority shareholder liable for unpaid dividends to minority shareholder?

Is a majority shareholder liable for unpaid...

Hi. New here so grateful for any help. To cut a long story short I am a 10% shareholder and ex-director of a company without the resources to pay me the ~£300k I am owed in back pay and bonuses. I am kissed that goodbye as, although the majority shareholder and director has personal assets I understand that the principle of the 'corporate veil' means that the best I can hope for is pursuing the company for unpaid wages, forcing them into insolvency and waiting in line for crumbs from the administrator. However, I am also owed dividends from the past 11 years totalling £150k. If the majority shareholder paid himself his 90% of the declared dividends in full is he in any way directly personally liable for my unpaid dividends? Thanks for any advice. And, yes I know that I have been a complete mug..!

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26th Feb 2016 15:17

Only if you can prove he's acted unlawfully. Serve a Statutory Demand on the company then get it wound up and let the liquidator recover the dividends from the director if they've been unlawfully paid. I fear you're going to have to go legal on this so consult a good commercial solicitor

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By ABltd
03rd Mar 2016 09:52

Stat demand on company or director

Can you explain a little why the stat demand would be served on the company and not the director personally.

I am in a similar position .

50/50 shareholding

me - 50% shareholder only

other 50%shareholder is also sole director

dividends have been declared of 233k - director shareholder taken all & not distributed.

my question is do I serve stat demand on director personally for 116.5K or company?

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03rd Mar 2016 10:05

A Stat Demand is served on the debtor, which in this case is the company which pays the dividend to it's shareholders and not the directors who declare it. You need to seek urgent legal advice and I suggest ask the solicitor to prepare the Stat Demand

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By ABltd
03rd Mar 2016 11:19

Stat demand on company

Thanks for your reply Bernard,

which figure would I use? 233k or 116.5k

the situation is that the other 50% shareholder director has been paid 233K & I've been paid zero.

 

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26th Feb 2016 15:20

Qua what ?

Qua shareholder, no, But qua director ?  Possibly.

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26th Feb 2016 15:46

English translation

Lion's point is that a shareholder is not liable for any failure by the company to pay sums due to other shareholders or creditors.  However a company director may be liable if he causes the company to misconduct itself by failing to pay what it should.  It depends very much on the circumstances.  See a solicitor who deals with company matters.

RM

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27th Feb 2016 09:51

Thank you

runningmate wrote:

Lion's point is that a shareholder is not liable for any failure by the company to pay sums due to other shareholders or creditors.  However a company director may be liable if he causes the company to misconduct itself by failing to pay what it should.  It depends very much on the circumstances.  See a solicitor who deals with company matters.

RM

Perfect.

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27th Feb 2016 15:23

What have you been doing for 11 years if you haven't got paid dividends all that time? Does the majority owner even acknowledge you are a shareholder?

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By JD
27th Feb 2016 17:02

Take Advice Before Doing Anything

 

The starting point, may be your shareholders agreement if any.

Then there are the Directors duties of acting fairly between shareholders and in the interest of the company

After that, is there any documentation ( e.g directors minutes) showing the declaration of dividend or how after tax profits should be distributed. As one has to ask, are the dividends legal, as the lack of cash to make the payment would suggest that the after tax profits may not have been sufficient or the majority shareholder has drawn rather more than what was due, with his DLA being overdrawn.

 

 

 

 

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03rd Mar 2016 10:36

Urgent Legal Advice

The OP hasn't been paid their dividends for 11 years. I don't think they have any urgency in them!

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03rd Mar 2016 10:52

No rush at all

cheekychappy wrote:

The OP hasn't been paid their dividends for 11 years. I don't think they have any urgency in them!

 

Exactly! Which is why i suggested that the majority shareholder might be under the belief that they own all the shares of the company?

 

To the OP: Was a share certificate ever issued? What does the capital allotment say on Companies House? Does this list you as a 10% shareholder? Strictly, the information re the shareholders should be kept at the "Registrar of Members" and can sometimes contradict what is listed on Companies House. Partly due to timing, partly due to being lazy with filing etc...

 

 

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03rd Mar 2016 10:52

I wasn't replying to the OP but to AB ( comment just above my reply)

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03rd Mar 2016 11:27

Your claim would be 50% of the dividends shown in the accounts

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03rd Mar 2016 14:54

I agree with John but stress my earlier advice  - consult a solicitor. On the outline you have given there is a case for the director to answer, which is not within AWEB's remit to advise

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