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.

Your parents have treated you appallingly. take legal advice and get rid.

Do not feel guilty or bad for running down the current company. Start your new one with you as sole trader/shareholder and transfer as pp have said (after taking proper legal advice).

Work out how much a bank loan would have cost you. If you’ve paid your parents back for that (I guess you’ve paid far far more), you have absolutely no reason to feel bad.

No child should ever feel like they owe their parents for money spent during their upbringing. Your parents job was to bring you up. If they chose private school and to fund your overseas study, that was because they wanted to give you a good start, not to tally up what you owe them in return.

You need to get on the stately homes thread as you really don’t owe your parents anything for your childhood and it’s sad that you think you have to consider it.

Get legal advice.
As part of my job I deal with co sec stuff. Where I am (offshore jurisdiction) you need shareholder consent to wind up a company.

However per M&a you also need consent from all shareholders to transfer shares and a lot come with pre emption rights meaning that they must get offered to other shareholders first.

This is something I’ve seen in uk companies too.

Also if your parents gift shares to your brother and if you’re in uk there may be tax issues for them.

If it was me. I’d try and block the share transfer. You say they’re “just” shareholders but they’re the ultimate controllers. Check to see what shareholders can do. Usually a simple majority can ditch directors. As far as I’m aware a 75% plus majority needs to wind up.

With all the legislation at present will your bro be happy for his details to be made public (co house (or equivalent)) this will also probably affect his tax return

Your parents ought to be utterly ashamed of themselves. Find a way to stop paying them anything. I think you are right, they see you as a cash cow, but let a solicitor deal with them from now on.

I’m glad you are going to get proper legal advice OP. There has been some good advice on this thread but also lots of incorrect advice. One thing I would point out is a few posters have suggested your 2 employees resign from your current company and are then employed by a new company owned 100% by you. This would be very unfair on them so you need to understand TUPE rules to protect their continued service - your legal advisor will be able to help.

Good luck to you, it sounds like you have built up a very successful business and your parents are behaving disgracefully.

Do you have an accountant OP? I'd recommend having a conversation with them in the first instance if you do. They'd likely recommend you speak with a solicitor too though as transferring the trade to another business could potentially have implications for the other shareholders.

In the meantime, however, I would seriously consider your idea of paying yourself more so there are no dividends to distribute.

Yes it will cost more in personal tax and employers NI but don't forget it will be a corporation tax deduction so will save money there.

Is the increased tax burden worth it for not having to pay your brother (or parents) more money?

I feel for you OP. My business has a 25% shareholder I want to get rid of but it's so difficult.

If you're in the London area (W/NW side) and you want the name of a good solicitor, let me know as I know one that would deal with this.

Fucking hell op..with family like that who needs enemies
I'd of cut them all of from when your brother punched you in the face and they did fuck all...

End the company and your relationship with all of them.your parents are using you.draining you .your funding their lifestyle,how fucking dare they ...this thread has made sooooo angry on your behalf op...I want to see a thread in years time where you tell us they are cut out of your life and you have full control of your (new?) company...

Undoubtedly the OP's parents are shits.

OP, please forgive me if this is wrong, maybe the OP stands to inherit a considerable sum from her wealthy parents, and does not want to jeopardise this by drastic action over her company.

Though even if she does not prevent the parents giving away her company, they might still leave all their money to the Golden Child anyway.

Resign from the company and set up another and work for it , im assuming you don't have a contract of employment stating you can't work for anyone else or speak to current clients. This will only work if your customers aren't tied to contracts with your current company. Then all you have to do is continue to file accounts for both companies the first company but only one will make anything, no need to dissolve the first company so you don't need shareholder agreement. If your dad is a director then resign your directorship so it is up to him to sort it out

Oh my god I have no advice but I'm truly shocked at your parents.

Book a solicitor on Monday. Pay yourself more in the interim to avoid dividends for your greedy parents. AND have some therapy. Please don't allow yourself to be dominated by your family.

Good luck 🙏

How awful for you op, to know that your parents are capable of treating you like this. Good luck with the legal stuff.

Could you tell them that if you buy back their shares, they will then have a wodge (to leave your B, although in theory it should be left 50:50) if they refuse, you will wind up the company, & no-one gets anything. including them & their dividends.
I expect they will change their tune.
But there will be no coming back, they will continue to love golden boy, & you will be cast out. (No great loss IMHO)

You parents have treated you really badly.

Start paying yourself and your staff more so there's nothing to be paid out as dividends. Even if it's less tax efficient it would be better than paying your abusive brother anything. And speak to a solicitor, find out what you can do to get yourself out of this situation. Even if your parents do disown you as a result you'll be better off.

I know little of running a business but my goodness I’m cheering you on from the sidelines Bubs. How utterly appalling they all sound.

Some good advice here from many. You deserve to rise up from this free of them and 10x as successful. The very best of luck

So you paid it back as if it were a personal loan? Paid it back from your wages,

But it was a business loan, and they still got dividends? So they made you agree to give them back all the money from your own wages, whilst still leaving them with half your company and the dividends for the whole time.

They shafted you. Seek legal advice as soon as possible.

I would close down the business and restart it in your name only, I would also disown your family, who does that to their child? They have had their money back and more and have broken your agreement of selling their half back to you, I would be livid and wouldn’t want anything to do with them.

I hope you manage to get some good legal advice and I hope you come out on top with this.

@Bubs101 there is a lot of bad and incorrect advice on this thread!!!

I am a Chartered Accountant and run my own Ltd Company, I'm not going to try to give you detailed advice because it's been a long time since I've dealt with anything like this but the first thing you need to do is make an appointment to see your ACCOUNTANT who will be able to advise you on the structuring/way forward including the legalities, you don't need a solicitor at this stage.

Depending what your Articles of Association say your DF may not be able to gift his shares to your DB anyway, it's not about selling or giving, it's a "transfer" regardless of whether money changes hands and there are rules around this (also possible tax implications for both DF and DB but that's a whole other worm hole!!)

If I were you and I was being really "petty" I'd simply not declare dividends - but it depends how much you need the income yourself.

You could just take what salary you need and leave the rest in the business, no dividend declared means DB gets fuck all - after a couple of years he'll get fed up and decide selling you his shares is better because he'll get cash now. It might mean you taking a hit on either less income or slightly more tax for a while but think of the long game - you'd get 100% of your own company in the end

I agree I can't believe you have not only paid dividends to them over all these years but paid back the loan as well! That is completely double dipping into your finances.

A reasonable parent would see they have profited from this investment (at the cost of their own child!), and be content to now relinquish this investment to the person that has done all the work in this. Not screw them over by gifting it to a brother who could potentially undermine the whole business (they have been hands off, but unless it is specified, he could have rights to be involved).

Would they consider gifting half their shares to brother and half to you, so that you hold 75% and can make decisions relating to the business? The 50-50 split was a bad idea (hindsight being a wonderful thing), and will be a disaster if brother is the other half.

Get professional advice from suitably specialised solicitors and accountants.

Trusting others to tell you the right thing is partly to blame for this situation in the first place.

Your parents are being shitty about this.

Was your accountant aware of your arrangement to repay the capital privately? Really they should have advised you against this as it makes so little financial sense.
However it’s done now but you do need to talk to your accountant and access your position now. They can help with options and tell you what specifically to get legal advice on.

I’d recommend you look for a good firm of chartered accountants OP rather than a solicitor.

I’m the former and I get requests from clients’ solicitors all the time to check that what they’re advising is correct. We’re trained in company law as well, and can check that you’re not going to inadvertently land yourself with a massive tax bill (capital gains, for example, if you transfer the trade from one company to another).

*assese not access

Sounds like Frangi has some good advice. I’d book and see your accountant. Your parents sound awful.

set up new business name, move your clients, close the current and pay them out. Get on with your life.

strip assets out by making pension contributions,