Silent Partner

T

Twister

Registered User
Messages
15
Hi

I am a silent partner with a 25% shareholding in a small company. Up to now my only input into the company was financial. In the last year the company has come on leaps and bounds and have recently acquired government contracts. The other main shareholder is the guy who runs the show and is there on a daily basis paying wages, dealing with the bank manager, accountant etc. His shareholding is 75%.
My question is, as a silent partner what entitlments do I have in regards to looking at the bank account, books etc? How often should I ask to see these?Is there anything else I should be doing to ensure my investment is utilised correctly? I am confident of the way things are run however I would like to have my finger on the pulse a little bit more without getting too involved.

Thanks in advance

Regards

Twister
 
Hi

Its difficult to say what entitlement you have not knowing the full extent of your relationship with the other shareholder. If you are both directors of the company, then the companies act requires you to keep proper books of account and to act responsibly while trading. If you have no visibility of the dealing of the company how can you be sure?

If you arrangement is based on a contractual basis, where you have received a return on your investment, There is very little room to get a concise view of the company.

As the business is growing I would advise that you establish yourself more into the operations, after all you took the risk at an early stage investing your money.

If you would like to discuss further please pm me.

Aiden
 
Silent or not, are you listed as a director of the company? If so it's your duty to ensure company being run in a liquid and legal way. Is there an annual meeting of directors/owners?

You should also try to see audited accounts annually to determine how your dividend (if payable) is being processed. 25% is a reasonably big stake in any enterprise.

SFA or ISME handy for advice.
 
Thanks Aiden

-Basically the other director needed cash to start up the company (which is where I came in) I agreed to invest x for 25%
-Company is a limited company
-We are both directors
-I would like to establish myself into the operations a little bit more because as I said the company has done well and my initial investment looks like a steal at the moment which may (although I dont think) lead to a bit of resentment/begrudgery.
-How do you think I could get more involved in the operations as I obviously dont get a wage ( I am hoping ot get my initial investment back at the end of this trading year)

Thanks for the quick reply
 
Hi

Getting involved in the business does not mean the current operation needs to be changed, think strategically, where can you make a constructive contributing,what experience have you had in your life. The best thing you can bring to a company is open mindedness.

My work involves engaging in companies that require restructuring, guidance etc. I find that the easiest way for directors to "re-engage" into their own organizations, is through an area of common interest.Look at procurement - can you add value there? do you have a list of preferred suppliers? when was the last time you tendered this business? If you feel more comfortable with customers - when was the last time that they actually met you? are they happy with your service? are they buying a different product from a competitor that you could sell them?

Finish reading this mail by changing the title in your head from " Silent Partner" to "Strategic Partner" - If you are looking to disengage from the company soon you will need to have a list of objectives set out, milestones if you like which you need t achieve before this can happen.

Please feel free to PM me, if you would like to discuss one to one.

Regards

Aiden
 
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