To not want parents to give away half of my business?

[Bubs101]

First-time poster here! So go easy on me.

I set up a small consultancy business about 10 years ago and am doing quite well for myself now, however it hasn't been easy. My parents gave me an initial sum of £10,000 to help set things up, however, this was on the condition that they own 50%, which at the time I agreed to, as they were my parents and kindly invested in the business and me. 10 years later their initial investment has been paid off and they have been regularly receiving dividends, so have done quite well of the initial £10,000.

However, as I'm in a good place financially I asked them about buying back the shares they have, gradually, so I can have full ownership of the business, this was initially agreed that I would be able to do this when they first invested as my parents "don't want anything from me". But now this is where it gets tricky as they have now refused saying they are going to gift my brother the shares instead! As he is expecting his first DC (I have none) I'm shell-shocked and livid. My brother and I have a very complex relationship and he was physically and verbally abusive to me before I moved out, though he faced no consequences as he was the golden child who could do no wrong! My parents are aware of how I feel about my brother and we are virtually NC, except Christmas where we are civil for the sake of the family.

I'm just really upset by this and was wondering if there was a way I could stop this from happening. I've worked so hard to get my business to where it is, my brother is working but has always expected handouts and is naturally smarter than me but very very lazy so he earns about a third of what I do. I just don't want him to reap the rewards of my blood sweat and tears especially after how awfully he has treated me. I've told my parents how I feel but they are having none of it and have told me that they own half the business and are entitled to do with it as they please. AIBU in wanting to seek out some legal advice regarding this, I just fear my doing so my parents will cast me out.

Wow, it sounds like your own parents took you for a ride in the initial set up of the business. If the initial 10K was a loan, then it has been paid back many times over and you owe them nothing. If it was an investment, then the dividends you have paid them are all you owe them and you should not need to pay back the "loan" because it was an investment. It has to be one or the other -- if they convinced you their 10K was both then they have shamefully abused your inexperience.

I agree with the others. Take legal advice on whether you are bound by your original agreement (did a solicitor draw up a proper contract for you?) and if you are then what is the best way to shut the company down and start a new one with a minimally different name. Your clients will not even notice and you will be shot of them all.

You sound like someone who has earned her success all by herself and should not have to give your hard earned money to your obnoxious brother.

I don’t think you’re being unreasonable at all, I think it’s unreasonable to put you in that position, I can see their intentions are good but it’s not in your best interest. Definitely seek legal advice and good luck!

The money from your parents has been paid back in full so how do they still have an interest in your business. It was like a loan surely. You definitely need to speak with a lawyer dealing with company law if there is anything written down between you and parents. Otherwise a solicitor should be able to help.

👏 what a fab result!

Just seen your update after I posted, well done!

what a pair of cunts. No really how could they screw over their own child like this? If they want to give your brother cash, fair enough but theoretically speaking you are working to support him. You are so in the right. Get a solicitir and make itclear you want nothing to do with them. I imagine they wanted the 50% share and they have a few quid? Normal people do not do this to each other.

bubs am really pleased you came back to update on this. Keep the parents sweet until it is all signed and done.

Congratulations on your successful business.

Glad it worked out!

There are all sorts of things you can do I would advise an experienced accountant rather than solicitor to be honest. They can look at the way the company was formed or agreements reached. Dividends is returns on the money rather than paying them back so it is right that despite paying dividend the share value is still there - in fact the share value may be higher given reasonable turnover.

What are your terms in the setting up of the business for selling of the shares etc.

There are lots of ways to get other shareholders out of the picture without closing so it just needs a bit of prep work. But fundamentally you don't need to close a company and also you don't have to pay dividends either - you can create different sorts of shareholders so some have priority over others and different dividends, you can pay yourself before dividends (reducing dividends etc)

At the end of the day it would be easy enough to run the business down and start another to rule out their involvement. You have no loyalty to the organisation set up between you if they don't etc. I would tighten the terms of operating and what the company provides to limit the flow through of money (doing the other business through another company with no other investors!!) and also limit dividends payable by making sure you give yourself salary, pay into pensions, run all costs through the business etc so profits and therefore returns are limited and this will also reduce the value of shares.

So yes accountants advice

Well done OP. Such a difficult situation for you but you have evidently dealt with it calmly and with integrity.

Thanks for the replies ladies... are you males. Women tend not to use this phrase.

Well done op, And a lesson to us all to get proper legal advice before getting into business or financial partnerships

Still astonished that with a thread of over 300 messages, people don’t read to see if there’s an update.

Makes them look as thick as 💩.

🙄🙄🙄🙄

That's awful. Money from relatives is so often a poisoned chalice. To avoid huge legal bill, would you be able to close it down, repay them, then set up under a totally different name & not tell them til dust settles? You can justify it as a new business plan & revamp if they get arsey, don't go there with their betrayal etc.

Argh, dodgy phone & missed your update. Well done OP.

@bignosenobum I use the phrase "thank you ladies" when speaking to my team/group of females and I'm not a man. Odd you think only males use that phrase

I'm afraid a lot of replies here fail to appreciate the nature of funding, share ownership and profit distribution.

That's awful. Money from relatives is so often a poisoned chalice. To avoid huge legal bill, would you be able to close it down, repay them, then set up under a totally different name & not tell them til dust settles? You can justify it as a new business plan & revamp if they get arsey, don't go there with their betrayal etc.

I rest my case. 🙄🙄🙄🙄🙄

@russianwife

you could finalise this and look like a nice kind professional business person...rather than the selfish individual you come across as.

You think that a man who chose to punch a woman in the face for asking him to clear up his own mess should have a half claim on her company? Because someone once lent her 10 grand, which she's repaid tenfold? And that someone objecting to this is selfish?

Just on that last point alone - on what planet do normal, nice parents exploit their children like that? It's hideous, the very idea.

I'm not sure if your problems relate to understanding normal human morality, or just reading comprehension, but either way, your post is incredibly stupid.

@bubs101 I'm so glad it is at least being resolved well. Your parents have behaved very badly, but at least it sounds as though the risk of losing you from their lives did, in the end, matter more than money. The low contact does sound wise, and I hope your standing up for yourself at last has set some boundaries. It has to have been very hard.

I hope things in future are very much less stressful.

Here is a sneaky idea, is it possible to some how issue more shares which you then buy so now the total number of shares you own is more than 50% which would mean you now have a controlling interest.
Also are your parents named as shareholders.
Just found an explanation on the net of what I mean.

"Imagine a company with 1 Million shares trading at $100. That's a market cap of $100M. Imagine you own 1000 shares of the company. You own 1/1000th of the company.

Let's say the company offers 1M more shares in a secondary IPO. Suppose the company can sell the new shares at the current market price of $100. Now the company would have a market cap of $200M of which $100M is in cash. In this case, you will own 1/2000th of the company of a $200M company, so you have no net gain or loss, only dilution of ownership (which also means dilution of voting rights).

here is the rest of the article
www.quora.com/Can-a-company-create-more-shares-Will-I-own-a-smaller-percentage-of-the-company

@russianwife Are you on glue? The ony selfish people are the parents who behaved like the worse kind of loan sharks, continually taking money for a loan long repaid.

@russianwife Have you RTFT??? Seriously?

Please gather all relevant paperwork, take it with you, and see a solicitor. That's absolutely shocking of them. I am sure you should be able to do something to protect yourself. Good luck OP - fight for it!

Really glad to hear the update. I had to stop reading for a while as it was giving me high blood pressure. Hoping that you stick to your guns and that everything goes smoothly.