Shareholders bought property but director keeping proceeds!
Many years ago I, and a group of other shareholders, bought a holiday cottage and unlike a timeshare we each owned a piece of the company assets/building and contents. I essentially set up the company and remained as a director until 2010 when my ex-wife decided to take the lead role (I had somewhat lost interest, but still remained a shareholder).
25 years on, we all agreed to sell and now it’s time to divide up the money. My ex-wife is giving me some hassle about getting my share of the money, but moreover it seems she has come to separate ‘arrangements’ with the other shareholders (particularly those that were unable to attend the final AGM in person where cheques were handed out to those in attendance).
The more digging I do, it appears she has spun the other shareholders a line about 20% having to be held back for tax for 90 days and though this time has now passed, has told them that paying for professional help for the recovery of that 20% would not be cost effective as it would only amount to a couple hundred pounds per shareholder even if they are successful.
It seems most have accepted this and are content to have received the lion’s share of their money and have happily gone into the sunset.
What concerns me is that my ex-wife -the director- is going to keep for herself the ‘change’ that’s left over, including some unclaimed share proceeds (there’s a chap with shares totaling around £20k who we believe has died/is very old and/or is uncontactable).
I have attempted a MCOL against her as an individual (as she is the sole director and the only person in true control of the company/accounts), because I believe the company has acted properly but rather she as the individual is making these decisions personally for her own gain. It was summarily dismissed in Court by her solicitor on the grounds I should make my claim against the company.
Anyway, my question is:
Is there a way, apart from me claiming from the company the value of my shares through the Small Claims Court, to expose all of the accounts of the company? This would show to a Judge that monies have not been correctly and properly divided and the director looks set to walk away with anything ‘left in the pot’!
I had to quote the Companies Act to her solicitor just to force them to cough up the meeting minutes I’m entitled to as a shareholder.
Luke
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Member Since February 2011 - Comments: 3453 - Articles: 286
9:33 AM, 20th November 2015, About 10 years ago
Hi Luke,
This sounds like you and your fellow shareholders need our legal teams assistance.
Please see our Private Prosecutions page >> http://privateprosecutions.org/
And the members profile for Mark Smith (Barrister at Law) >> https://www.property118.com/member/?id=1945
If you can get together the sum and satisfaction is worth chasing.
Member Since March 2015 - Comments: 1969 - Articles: 1
9:51 AM, 20th November 2015, About 10 years ago
I’m reasonably well versed with the Small Claims process as far as dealing with tenants are concerned…I must be in Court once a fortnight, but this is slightly different.
Some of the problem is all the shareholders that have surfaced have been ‘paid off’ (well, enough to make them happy enough not to go to the effort of pursuing any more), so I may be alone on this.
I wondered if there’s something similar to a Form E or a way to force the company (via her the director) to disclose ALL income and expenditure, thus proving conclusively my case.
Surely a director can’t just walk away with the company proceeds and it all goes undetected if unchallenged…?
Member Since July 2013 - Comments: 1266 - Articles: 1
10:40 AM, 21st November 2015, About 10 years ago
Luke, if this is your ex-wife, was not the asset assigned or divided when you divorced? For your share, if you have one, you need to go back to the divorce court, it’s nothing to do with the company.
For the chap who is not available, she cannot keep the share. She must hand it over to his estate if he is dead. If he has disappeared, she should contact a tracing company or solicitor. Failing that I think the share should be distributed evenly among the other shareholders in proportion to their shares but get advice on this because I may be wrong.
Member Since June 2015 - Comments: 194
11:39 AM, 21st November 2015, About 10 years ago
It is not clear from what you say how the proceeds are being distributed. From what you say it seems that the property in the company was sold and the proceeds are being distributed to the shareholders.
If the distribution is not as part of a winding up then tax would need to be paid by the shareholders to get the money out of the company. If it is by way of a dividend then there is a tax credit associated with the distribution. Each shareholder should have received a dividend voucher with their payment.
If the company is being wound up then this should be done by a licensed insolvency practitioner as the amount of assets is in excess of £25,000.
The 20% deduction may be the tax on the gain on disposal of the property. This would be correct as the tax has to be deducted before the remaining funds can be distributed. The tax is payable 9 months after the year end of the company.
I would suggest that you speak to the company’s accountants before doing or saying anything else. Just ask them to explain what has happened without making any accusations. As a shareholder they should explain things to you clearly.