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.

Good luck💐

I can't believe anyones parents would lend them 10k, then accept 100k back. From your own child! shocking.

Definitely see a solicitor asap

This made me so angry for you, OP, I"m glad you're going to see a solicitor

Great to hear you are getting legal advice,
so that you can protect YOUR business, your staff, your intellectual property, your assets, your reputation and so on.

(Auntie dusts hands off).

My parents fucked me over with an ‘investment’ too OP. Not as bad as your example but I trusted the legal agreement they drew up....they doubled their money and walked away with more than three quarters what I made. From my work. Legally. Bastards. One of many reasons why I am LC.

You definitely need to talk to a lawyer. Dissolving the company sounds like a lot of work and effort to me. Would have thought it would be easier to set up a new company, move yourself across, offer staff employment at new company, and leave old company empty of anything. But regardless, a decent advisor will find a straightforward solution for you.

Don’t let your brother get hold of half your company.

Don’t carry on feeling you need to make up to your parents for not being as good as your brother. They will never consider you his equal - time to accept that and see them for the people they are.

“Once the new one is up and running, you could even offer to let your parents buy you out of the old one for a nominal price. That way, everybody can be happy and you will go on to enjoy the continued fruits of your hard work and efforts prove them right that you're 'nothing without them' and then, without you to 'hinder them and hold them back', 'perfect in every way' 'Golden Boy' and his likewise parents will have a free rein to run the company themselves with their own 'far superior' skills.

That's extremely generous of you and gives your brother an ideal way to earn much more. The only way it will definitely could possibly fail is because if he ends up showing himself for the lazy, ignorant oaf that he is experiencing confounding business setbacks wink”

Cheeky & I like it.

But sensible legal stuff first.

Sorry but your parents have used you as well.
Sounds like classic narcissists; your brother is the golden child and you are the scapegoat.
Apart from the specialist legal,advice to dissolve your company; have you thought about getting some counselling to process the abuse you suffered from your brother and was enabled by your parents?

it is so bad that you have paid them so much money and then they haven't shown gratitude for it and that they've probably used it to prop up your brother.
Your views on family loyalties and support are totally skewed.

Once you have the legal advice, I would try once more to explain to them that what they are suggesting is hideous and will result in you never speaking to them again. Is your dad more sympathetic? Maybe him on his own?

You are worth so much more than these people

I work for a small business where one person owns it 100%. I have thought of asking for a modest amount of share of the company (talking very small percentages) in lieu of annual bonus, but a friend who is an IFA told me that was a terrible idea as shares in any company that isn't publicly listed on a stock-exchange only have any value at all by agreement of the majority shareholder who can do anything they like (including paying themselves a bigger salary or dissolving the company) making anyone else's shares worthless.

You have a slight problem if the split is truly 50:50 - most times when a company is split it is actually 50.1:49.9 so that there is always a clear majority in the event of dispute. if you are truly meaning 50:50 you may have a problem.

I think you need to set up a new company entirely solo and run both in parallel for a time. Gradually transfer customers over from the old company to the new so there isn't a cliff-edge in the accounts of the old company. transfer the staff over one at a time when the profits on the balance sheet of the new company can take it. likewise sell any assets belonging to the old company to the new company at a value of your choosing (you can use this to help you pay salaries from the old company from income earned by the new company during the crossover). do this slowly over 3-4 years until you have a company you fully own doing all the business and the old company you own half of which has no customers, no staff, no income and no value. you can then gift your half to your brother too.

If they want to disown you then......great! Let the trash take itself out.

Good luck to you OP.

Having experienced something similar within a family business. My advice would be to seek legal advice and ensure that once you have extricated your parents that you are either 100% owner or have a very robust shareholder agreement drawn up. We resolved our similar situation with a one off goodwill payment which almost crippled our business in order to buy back the shareholding. As the business had grown the goodwill payment was more than 10x the initial investment so it was expensive (but that’s where things had become nasty, I imagine your parents would be more reasonable). Best of luck OP, stick to your guns, with the work you’ve put in, the rewards should be securing yours and your employees financial future only (and I’d hope your parents would also see it that way).

How did you come to "pay the original investment back"?

Share capital stays in the company until it closes down - that is why you pay dividends.

If they actually gave you a loan, which you paid back, they are not shareholders, so were not entitled to any dividends.

CF CF CF

I need to RTFT, but did you issue share certificates, record on annual return, companies house etc as required?

Good luck OP

Is this a fairy tale? It’s awful behaviour by your parents of epic proportions. Get legal advice and do everything you have to do to protect yourself.

Your parents are vile. Get legal advice.

Op, if you are not familiar with company setup then take some of the advice on here about the approaches to dissolving a company, will help prior to talking to commercial solicitor.

However your main AIBU is should you do it and your fear for the implications.

If your parents are savvy and determined shareholders (how involved/controlling were the in the setup?) then you will unfortunately have a relationship issue.

Whilst I can completely understand the emotion and worry, it's probably not possible to avoid. In fact the company issue may just be a trigger that would have happened anyway. It sounds as if dynamics have been brewing and often when we reach adulthood a reset is needed by enforcing a boundary. Then a flare up and newer and healhier relationship defined.

It doesn't mean the rift will be permanent but that does depend on your parents and how keen they are to maintain their control.

If they went NC with you over this it suggests that it was always a possibility and some other event would have triggered it.

If your parents are not savvy then you may be able to soften this, by suggesting a new company is needed for xyz reason, hopefully with payoff so they will accept it.

Adulthood is when we have to redefine our parental relationships. Act in good faith but don't be held to ransom just for the relationship. They must also place some value on thei relationship with you so hopefully any upset will not be long lasting.

This is such a shame. They screwed you over - I don’t doubt that you had no idea of the ramifications of selling them shares or having an exact 50/50 split, but I bet they did. They could have lent the company the money under an interest bearing loan agreement, but instead they wanted an investment - I bet they clocked in advance how much money your company was going to make and that their return would be much bigger that way. I’ve dealt with a few shareholder disputes like this and it’s always the case that someone knew from the beginning that they were screwing the other party over.

I think you need to sever your relationship with the company. Shareholder disputes are lengthy and invariably very expensive.

As the company is “you” and relys solely on your labour, you are perfectly entitled to decide to trade through an alternative vehicle. I would inform the shareholders that you are withdrawing your services from the company with x months notice. Treat the contract between you and the company separate from the family issues. You are under no obligation to work for that company if you don’t want to.

I wouldn’t do any of the sneaky running a company in parallel things, it really does look bad to others you trade with. It would be much smarter to say you parted ways with that company and went out on your own.

Nothing to add except to be another voice saying your parents are dicks and you have nothing to feel guilty about for keeping the money you have earned.

Take appropriate advice, wind up the business and get on with your life.

Please be cautious about some of the advice here - at 50/50 you can’t just do what you want with the company and as a director you have a legal responsibility to the shareholders...

Get legal advice...

I’m glad you are starting to realise just how horrid your family are to you and are willing to it you first probably for the first time. My brother has been violent to me all my life. I was equally blamed.