Rights as a director

S

Spudney

Registered User
Messages
20
Hi

Im also looking on some basic info on rights as a director, in a company there are two directors both present since foundation one owns the majority of the company the other one doesnt like the way he does things, how easy is it for the bigger director to get rid of the smaller director? now the smaller director has done nothing wrong, both work for the company if anything the smaller director puts in more hours than the bigger director but the relationship is starting to sour due to attitude to business from the bigger director.

Anyone any ideas?
 
Dear Spudney,

Firstly you have to seperate the roll of a director from that of a shareholder.

Perhaps after you have done that you might consider remaining as a shareholder but resigning as a director or having the other director resign and you stay on.

However, perhaps the retiring director would not want to be a shareholder in the company if they were not also a director. If this is the case then it would be necessary for one shareholder to buy out the other!

In this environment if you have a successful company it would be a shame to see it fall apart and perhaps you both need to reconsider how you are working together for the good of your company etc. Also, remember that the shareholding of a director does not give them the upper hand when it comes to making decisons to the running of the company.

Best regards
 
so are u teling me i have as much right to make company decissions as he does even thought he owns 90% and me 10%?

also how easy is it for him to get rid of me, he has absolutly no grounds at but i just want to be in the know?

also if he makes decessions and never consults me is that illegal?
 
is it really worth my while being a directory that’s not listened to, it’s his way or no way he makes that perfectly clear yet has made horrendous business decisions with no reprimand

what advantages do I have in this situation of being a director, am I better off being happy with the job I’ve got and resign and be a shareholder and ride out the economic storm and be thankful I have a job?
 
Well you are also a 10% shareholder of the company, so if the company is successful you could be building a fourune/pension!

Perhaps you should yes consider yourself happy to have a job and perhaps take a step back and see how you coud possibly make good of the situation. However, at the same time no point having a job if it is affecting your personal life etc.!!!

Best of luck.
 
thanks jack but on the notion of him getting rid of me as i question his decissions and he doesnt like that, am i in a weaker position if i resign as a director?
 
Hi Spudney

It sounds to me that you may be a director but in substance you are really just an employee. At a 10% shareholding level you would be classified as a non propriety director in that you are essentially just an employee. You are probably only a director because the company is required to have two named directors in order to form under company law.

However under company law a director is a director! You have certain obligations and responsibilities which are not affected by your shareholding. For example you are responsible for ensuring that the company trades legally and can pay its debts as they fall due.

My advise (if you feel strong or confident enough in your employability elsewhere) would be to say that you don't want to be a director anymore as TBH you are not 100% happy with the decisions being made. (You accept that it is his company after all.) You have been made aware of your responsibilities as a director and you would prefer to just go back to being an ordinary employee from now on if that is Ok with him.

As regards your 10% shareholding, any minority interest in a private company is problematic and arguably worth nothing. You can ask to be bought out but legally he does not have to unless he decides to vary the rights of the share capital. You might just be entitled to the 10% surplus on winding up the company. So you could just hold onto them and see if he makes you an offer.

Hope this helps

DB
 
Hi

He can get rid of you as he is the majority shareholder. He just calls a meeting of the company and the shareholders vote on the directors of the company for that year. You just dont get elected and thats that. Now there are protocals to be followed but esentially thats it.

Now there may be employment law to consider here but essentially you are employed by the company as a director and like every employee you can be got rid of.

DB
 
I believe you are in a stronger position as a director. Yes you are essentially an employee but well without knowing your colleague I imagine he would use it as an excuse to reduce your pay and possibly make your position redundant if that is possible.
 
so guys really is it worth my while being a director at all? by the sounds of the posts above not really esentially he will always win.
 
IMHO

If you seriously think the company is going down either now or in the future I would not fancy the thoughts of being a director. Especially if i dont have any input or control into how the company is run and being a director is just a title or a "badge" that I wear every day to work.

It can also be used as an excuse to make you work longer hours then you would if you were an employee. Hey your a director of the company you should be setting an example to everyone.

DB
 
DBRAN you have hit the nail on the head ur dead right, last month i was paid last as i was a director and employees should be paid first.

Whats the point.
 
Your resignition as a director could have a very negative effect on the company. Customers may feel that your company is unstable and depending on what you provide may decide to go else where.

All directors end up in situations like yours. However, in larger companies their would be several director with each being responsible for particular areas. But still we all have to put up with a senior manager who always has the last say.

As a director of the company have you signed any personal guarantees?

Also, if the company fails you will be investigated by the liquidator as the liquidator is required to consider making a High Court application to have your restricted from acting as a director.
 
as a director i signed up to a a factoring company and a personal guarantee with a bank for 50,000

can i get out of these?
 
The only way to get out of these is to repay back the bank or to see if it is possible to find an alternate guarantor!

If you are worried about the actions of the majority shareholder running the company into the ground then you seriously need to consider the need meet with the bank to explain your position so that they can be aware of the situation. The bank will be much nicer to you if you are open with them.
 
You must log in or register to reply here.
Back
Top