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.

[adriennewillfly]

But do get advice from a solicitor.

[Maryjoyce]

Even gift lovely brother the 50 percent you have lol then hey presto no business at all to have. But you need set up new business first of course

[7yo7yo]

They don’t give a fuck about familial relationships op.
Get legal advice and start a new company.
You have a toxic family op, it’s not your fault.

[notapizzaeater]

You need a shit hot legal business solicitor to find out your options

[StatisticallyChallenged]

If it's consultancy I'm imagining the physical assets are probably minimal (I'm thinking about my own field here where a consultancy could own little more than their laptops!) and most of the value of the company is the OP (and staff) and their IP. Liabilities probably minimal too.

If the parents aren't involved in the running then is there anything to stop OP selling whatever assets there are to her new company - this could be done at book value as it may not be much. She's the only director.

As PP described, running it down via servicing contracts is a totally valid approach, and if your parents aren't involved it could easily be done before they even notice anything is going on.

[Maryjoyce]

Never feel guilty to fold this up as in business family is nearly always a disaster involved in any business and sadly it’s how things are for you

[pallisers]

please go to the best solicitor you can afford, OP. That is the only thing you need to do right now.

[PersonaNonGarter]

You need a solicitor.

You can be disqualified as a director for deliberately sinking your business - although if your debts to employees and suppliers are paid it shouldn’t be impossible.

This is going to get tricky - I would go through a lawyer ONLY. Do not try to settle it between you and your parents.

You need to frame it that they should offer you the shares. They shouldn’t offer them to your brother or anyone else until you refuse.

[Bubs101]

Thanks for the responses everyone! As much I don't want to lose my parents I need to put myself first! I'll go and see a solicitor and see where I stand and what my options are, and going forward I'm going to seriously limit my contact with my parents as they have treated me like a cash cow and have always favoured my brother.

[mystar]

You need legal advice ASAP. check your share classification and articles of association.

I own a business and I swerve dealing with any company who dissolve/fold up just to write off debts or issues (there are three or four close to me who are renouned for doing this every other year). Doing this will also massive impact your credibility and reputation and you’ve clearly built up a really good business.

Get legal advice ASAP. Good luck x

[Willbeatjanuaryblues]

Good luck op how awful for you. How can people be so stupid. Perhaps they feel forcing you together like this will make you both get on!

[SoWhat21]

Did you repay them the £10,000 personally OP or via the company? Because if the investment was bought back via the company then they shouldn’t still be shareholders? How was the repayment to them booked through your accounts?
You should speak to an accountant as well as a solicitor probably an accountant first. There’s no need to panic though. Even if dissolving the company isn’t that straightforward there is nothing to stop you setting up another structure, informing clients and resigning from your current company. Then your brother is the owner of 50% of a worthless company.

[StatisticallyChallenged]

Wholeheartedly agree op needs to see a good solicitor (and probably accountant too) to work out the best route for her. The nature of the business is very much in her favour though

[TatianaLarina]

With 50:50 you have a deadlock. You may need mediation or outside intervention, a lawyer will advise the most appropriate way forward.

One way out in deadlock cases may be to use insolvency legislation that allows a solvent company to liquidate on “just and equitable grounds”. You petition the court with that.*

*Expensive, clearly.

[altiara]

You might not want to lose your parents, but from your posts they don’t have the same consideration for you. They sound like they have you just about under control - you provide a huge amount of cash and although grumble about your brother, you have never made a stand and challenged them. If you do, sounds like you know where they would stand and that keeps you just within their control.
Yes, they’re your parents, but they allowed you to be abused, what does that say about them? Not my idea of parents.

[Bubs101]

@SoWhat21

The investment was paid back personally gradually over time from the wages I paid myself. Paid them back after about 3 years.

[Bubs101]

@altiara

My brother only really became abusive at around 16, and he only punched and hit me a handful of times but never when my parents were around. The first time I told them, they blamed me, and said how 'I'm not innocent either' and was made to apologise to him for getting him so angry, he got off scot-free. Never told them a thing after, but he left for University and it stopped.

[TatianaLarina]

I own a business and I swerve dealing with any company who dissolve/fold up just to write off debts or issues

It can sometimes happen for a valid reason though (not every other year clearly). If a divorcing husband and wife are 50:50 business partners, they can hit deadlock if they can’t agree a way forward. It doesn’t mean that either are bad at running a business, or there’s something wrong with the company.

[SaturdayNext]

Try one last attempt at explaining to your parents that working to support your brother is absolutely intolerable for very good reasons, and spell out what his conduct towards you was. Point out that giving him the shares won't benefit him one iota because you will wind up the company, and make it very clear that if they want any relationship with you in the future they will give your shares back to you. The onus for keeping the relationship has to be on them.

[Melroses]

No - definitely solicitors/accountants whatever and get business and legal advice before you mention it to anyone.

Ducks in a row.

[Bubs101]

Need to go to bed soon! But thank you all so much for your advice! I know it was supposed to be a straight forward question and answer and I've slowly given half my life story, but it really has put everything into perspective.

[StatisticallyChallenged]

Agree with Melroses, ducks all beautifully lined up before you say a single solitary word to anyone.

[hellsbells77]

I was also going to ask if they are directors and/or shareholders.

Are you sure about the tax efficiency of dividends, as you only get £2,500 tax free these days? (and I hope they have been paying their own tax and not you)

This info from the government will also help www.gov.uk/limited-company-formation/shareholders

Particularly this bit:

Prescribed particulars
You also need to include information about what rights each type of share (known as ‘class’) gives the shareholder. This information is known as ‘prescribed particulars’ and must include:

what share of dividends they get
whether they can exchange (‘redeem’) their shares for money
whether they can vote on certain company matters
how many votes they get

Essentially, though, you need to speak to your accountant and a solicitor (your accountant may be able to recommend someone) because this is obviously a complex issue.

[YetAnotherSpartacus]

I'm going to seriously limit my contact with my parents as they have treated me like a cash cow and have always favoured my brother

Don't fall into the trap of doing more and more for them in the hope that they will love you equally. They won't. Also, make sure that they have plans for their care in old-age that do not include you, your labour or your money.

[mystar]

I appreciate that there are extenuating circumstances and It wasn’t a sweeping statement.

There is an estate agent near me who have liquidated 3 Times purely to write off debts and in doing so they have put other small companies under. The director still lives in a huge house, drives a Range Rover and only shops in Selfridges. She is everything I despise in a person. No morals.

Same goes for a posh bistro close to me. They are known for it. They rack up debts and then just liquidate, nominate another mate as director and start again. No thought for those impacted by the debts written off.

I have a close friend who owns a hair salon. After ten years she has been declared bankrupt and it’s purely down to her ineptitude at running a business. She’s started again but she’s struggling to get accounts with suppliers.

Winding up and starting again isn’t that easy is all I’m saying.