Feeling forced to sell my shares in Start up ! Help

A quick background I was approached by a friend to get involved in a food start up. I invested and eventually left my job to give it 100%. We set up a restaurant and food services business.The business has not traded profitably as we reinvested every penny into expanding, I took no wage although promised one. I left the company 6 months ago to return to work as there was not enough work for both and he now takes a wage.

We had planned a second restaurant which is now happening he is the majority share holder and made me an offer for my shares which is unacceptable. He has outlined that I can stay a shareholder in the original restaurant but not the next one. it will be in a separate company.The profits from the first one have been used to investigate the second restaurant.

The issue is the brand will be the same (same name), same menu, same website and staff that will work in both. I spent three years creating the brand.

Can he do this? I felt as a director he would not be acting in the best interests of the company??

What does your shareholders' agreement say about it?

Brendan

When you say invested, did you put in money as share capital or as a shareholders loan. Standard advice in such a company would to invest by means of a loan which is easier to extract from the company. It is highly unlikely that there is any shareholders agreement!! You are a minority shareholder and if you have a problem with the running of the company you will need the advice of a solicitor in order to progress any action.

The share agreement says that we would need to vote on a setting up a subsidiary company. He has 51% His intention is to set up a completely new company with no ties to the original but use all branding website etc for the second restaurant?

There is an standard agreement and it states invest the amount. So its not a loan.

Thanks for the help

There really is very little you can do.

Under the Companies Act you could take a High Court action under "opression of minority shareholders" but it would be very expensive.

Best is to write off your money and your friendship and note the lesson learned.

Brendan