Obstructive Shareholder

P

podge

Registered User
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15
Looking for some advice please.

I'm in an odd situation. One of our shareholders (who holds 25%) is currently poaching some of our staff for a new entity operating in the same business sector.

The person is not active in the day to day running of my business (he's an non-exec director).

Is there any mechanism in law, that I can use to remove him as a shareholder as he's obviously not acting in the best interest of the business ?

Thanks
Podge
 
As a shareholder, he can do what he likes; As a director, he may well be (an dprobably is) in breach of all sorts of duties to the company. It may be that he should be removed as a director. On the other hand, it might suit you to keep him as a director and hold him to account for breach of his director's duties.

You need good legal advice. The advice will be specific to your circumstances, which will need to be very fully outlined to your legal adviser.

I am afraid it is beyond the scope of this forum
 
this guy obvioulsy has a conplict of interest and can be removed by the company. you need to get legal advice, but yes, company law has lots of rulres on duty of care, etc.
 
podge said:
Is there any mechanism in law, that I can use to remove him as a shareholder as he's obviously not acting in the best interest of the business ?

Thanks
Podge
Click to expand...

Podge

Do you have a shareholders agreement? Such an agreement is to be used in such conflicts!
 
Thanks for all the responses.

We do have a shareholders agreement that covers lots of things but not this eventuality. I'm awaiting a response from our solicitors. In the meantime, is there anywhere that I can read up on a director's obligations in law ?

Thanks
Podge
 
I think I've just answered my own question courtesy of the Office of the Director of Corporate Enforcement:

Fiduciary Duties of a Director

A director is required to exercise his or her powers in good faith and in what he or she honestly believes to be the best interests of the company as a whole. A director is not allowed to make an undisclosed personal profit from his or her position as a director and must account for any profit which he or she secretly derives from his or her position, even in the absence of bad faith on the part of the director. Where a director abuses his or her powers, any action taken is invalid but may be ratified by a general meeting of the company.

It is not automatically a breach of a director’s duties to be involved in a business which competes with that of his or her company. However where a director has a contract of employment or service contract with the company, it may be in breach of his or her duties of fidelity and loyalty to the company to do so.

[broken link removed]


Thanks for your help
Podge
 
Niall M said:
this guy obvioulsy has a conplict of interest and can be removed by the company. you need to get legal advice, but yes, company law has lots of rulres on duty of care, etc.
Click to expand...

The original post asked if he could be "removed as a shareholder" which I think could prove difficult, if you mean removing him as a director then I would agree it seems likely he could.
 
You could make him an offer for his shares and see what happens - sounds like he doesn't value them too highly.
Would being rid of him as shareholder solve the problem of him poaching staff? I understand why you just don't want someone like this involved in a small business though.
 
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