I started a business about seven years ago and I and a business colleague put 50% each into starting it. I used to own 50% of the shares. I since had to move to the US with my husband and take a lesser salary and role in the business. However, I still went back to UK for at least 4 to 5 months a year and my role was executable from the US. I took a considerable drop in salary to reflect the location and what I could contribute. This worked perfectly for around two years.
In 2005, my partners contacted me and wanted me to transfer 50% of my then shareholding to them and with a lot of pressure and threats from them I relinquished my shareholding since they told me that if I didn't do it they would wind the company up.
We negotiated on the phone and the outcome was that I gave them what they wanted but in consideration they had to guarantee my salary/retainer for 5 years. In addition my business partner no longer wished for me to play and active role in the business and basically said that I should be on hand on an as need to basis.
Given the situation I took a back seat in the business as requested. The transfer of shares occurred in October 2005 and for a few years we performed that contract, I performed duties on an as need to basis, executed strategy decisions with them, etc. I however no longer had a specific role.
Last year in June 2008, informs me that he is going to make me redundant I of course say why you would do that since you have guaranteed me a retainer for five years and the terms of that are not up. He says that he has no intention of paying that and that he would only give me statutory redundancy. Therefore we couldn't agree on this and we have fallen out.
He continually threatens to wind the company up. I still own 25% of this company and am concerned that not only has he screwed me of the original contract but he is also going to cheat me out of the remaining 25%.
The facts are that they have got greedy and want me out. In the process they will use every vehicle in their possession including lies to steal the business from me. THIS BUSINESS WOULD NOT EXIST IF IT WEREN"T FOR ME IT WAS MY IDEA.
The problem is that the costs of taking them to court to stop them doing this are prohibitive. The business has a few hundred customers and a turnover of over a million. The company is making a loss but improving and has grown substantially. The company has never been allowed to make a profit and the current partners charge it an extortionate management charge of 400K a year. The company would show a profit, but then they would have to pay tax and pay dividends which they obviously do not wish to do.
The company that we set up has since been incorporated to a group structure and merged with their other business.
I know that my share of this business is worth something and I really wish to protect it. However Legal costs are prohibitive and I really need someone to represent me on a no win no fee basis so that we can also get legal expense insurance to fight this.
We do have a shareholders agreement, but everything comes down to my needing expensive lawyers - surely there has to be a way of protecting my interest. What is the point of contracts if they cannot be enforced just because you do not have the funds to fight a legal battle.
It is really frustrating that those with deeper pockets always win despite them being in the wrong.
I am willing to sell my share of the business to them, but they have declined my extremely fair price in preference to just finding a way of taking my share for nothing. I need to do something to stop them?
In short;They own 75% and I own 25% of the business. We have not reached a deadlock in terms of how the business should be run, it's a simple matter of my partner wishing to get rid of me for nothing.
I also wish for the management charges to be revised since these costs are pretty much costs that already existed in the parent company and are fixed. The premises are owned by my partners pension fund and very few people that work for my side of the business are actually in this office. The employees mostly work from home and it could easily be run from cheaper serviced offices.
Any advice? Please?
Any Lawyers out there willing to take my case on a no win no fee basis?
Answer by Elana
You really do need legal representation.
Perhaps you can arrange a contingency with a lawyer - "here's how much they owe me, if you collect, you get this percentage."
If there are other shareholders involved (other than just you and the people you are fighting with), you certainly have the right to inform them of this conflict (since you're all shareholders, there is no way there is a non-disclosure preventing you from doing that).
Although you are not a majority shareholder, one power you do have is to audit them into oblivion. That is, for as long as you can pay an auditor, you can keep those books open for scrutiny.
I would also record any conversation you have with them (you don't have to tell them - the law says that if one person involved in the conversation knows, then he can record it). Make sure you keep all records and transactions.
Answer by Common
There's a reason that he's only threatening to wind up the company and has not actually done it - because that would force him to actually pay you.
There are a number of attorneys that take matters on a contingency basis. Your case may be one of those. You can get a referral by calling the bar association where the company is located and asking them for a contingent fee attorney that does corporate work. Good luck.
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