Company Director - Leaving - Equity Bonus from 2008????

H

HomersCash

Registered User
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Hi,

Hope someone can help.

I am a director of a small company.
I have 20% equity shareholding.

2008 has been a good year with good profits.

The accountants out there will clarify - the Accounts for the company can only be completed AFTER 2008 has completed, i.e.
2008 accounts completed in January/Feb/March 2009.

For various reasons I am leaving the company very shortly.

If the companies accounts are not finalised until Feb, I will no longer be a director of the company.

So - 2008 = profit. Director 1 = 40%, Dir 2 = 40%, Dir 3 (me) = 20%
Surely as I put in all work in 2008 - I am entitled to 20% of that profit.
If accounts not complete until Feb (and I'm gone) - how do I get my share?
e.g. 50K profit, how do I get my 20% = 10k?

Any help greatly appreciated.

Thanks in advance.
 
Your basic proposition -- that all profits be distributed -- seems to me to be unsound.

Is it intended that you sell your shares?
 
Do you have a shareholders' agreement to clarify treatment of shares held after departure of one director/shareholder? If so, the details will be in that; if not, just because you are resigning as a director does not mean you have to sell your shares, so it comes down to negotiation among you!
 
Unsound?

Equity is 20%
Business is structured in such a way that each year, the 20% shareholding is seen as a profit-sharing, i.e. if director has 40% and company makes 50K profit - then they "cashed-in" their 20K as a "bonus" for that year....

Contract all directors signed - (with company accountant) placed a nominal price of €1 per share.
So 100 x €1 shares in company representing 100%.
This means if shareholder with 40% sells, its a cost of €40.00

BUT
What about the profit?
i.e. 2008 = 50K, all previous years, directors "cashed-in" and received "bonus" - and this year is the same.
I merely want to find out if its possible for me to leave before accounts confirmed for 2008 (in Jan/Feb/Mar 2009) and receive the same as all other directors and same as previous years????

Thanks.
 
I say your premise is unsound because there is normally no requirement that all profits be paid out as dividends. Much, or all, of the profit might properly be retained in the company to finance expansion, or to create a safety buffer in case of future losses, or for another reason or for a mixture of reasons. Dividends are usually based on a recommendation of the Board of Directors and approved by vote at the a.g.m.

If you keep your shares, then you are entitled to the same treatment as the other shareholders (dividends are paid on shareholdings, not to directors in their capacity as directors).
 
Surely you would have discussed this with the other shareholders when the issue of your departure came up..?

If your selling your shares to the other members on your departure and resign as a director well your not part of the company anymore so you will not be entitled to any bonuses and why would you..? (bad timing-live and learn) If your not selling your shares well it a case of as you were on the bonus front...as your still part of the company so will be entitled to your cut.

Just a note if your selling your shares your equity shareholding may also be worth more based on the value of the current business turnover/profits etc.

Good Luck.
 
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