Will query- left % of business but not received any statements

[FreddieStarrAteMyHamster]

My father died 3 years ago and left me a small % of the business he ran with my brother. I haven't received so much as a copy of the year end returns. What would my rights be here please? I'm estranged from my brother but he has my contact details and my mum speaks to us both. Thanks.

Is it a limited company or a partnership ?

If it was a partnership, do you know who the accountants are for the business ?

If it's a limited company you should be able to download copies of the accounts from Companies House website. Costs about £2. You will also be able to get a copy of the annual return to see who the major shareholders are which presumably should include yourself. Get a copy of the will and the grant of probate from the Probate Registry. Cost £6. If a firm of solicitors extracted the grant their name should be on the grant so you can contact them and find out what happened.
If it's a partnership then if you are a partner you would be having to sign off accounts and file tax returns. Again this information should be in the will. PM me if you need more help.

This happened to my mum, I'm afraid your shares are worthless unless your brother (assuming he's the majority shareholder) wants you to have something.

It's easy to make sure a Ltd company (or partnership) makes no profit to distribute by paying it all in salaries to the directors (your brother?). You would get a share if it's sold but again it's easy to make sure it's not worth anything on a sale by disposing of the assets beforehand and paying the proceeds as bonuses or wages.

Sorry

Thanks, it's a limited company and I've now found it on Companies House. I'll download the returns, thank you. I only have a 10% stake and it's a small business, probably worth less than a million in terms of what is in the bank and buildings. Looking at the returns what would be the implications for me in terms of financial benefits and any tax implications?

What about dividends? I know he takes a regular dividend as mum told me, would I be entitled to a share of that?

depends on how far you are willing to go? do you want to go full action and demand 10% of profits / dividenes per year and risk messing up family relations and then for your brother to change the accounting so you end up with nothing?

and the 10% of the company you have a stake if you demanded it all at once could actully ruin the company and thus put your brother out of work (like happened to my older brother and arse of a sister she demand her share of our fathers 50% of the company that was also 50% owned by the my older brother wouldnt accept smaller amounts and forced the closer of the company because of it and is basically no longer welcome at any family events)

legally you are intitled to your share of the money but morally if its going to cause the company to fold to buy you out you might want to reconsider going down that route unless you hate your brother and want to possibly cause him hardship then go right ahead it would be expensive to claim if you had to go down the legal route and even then your brother could legally fiddle the books so you ended up with nothing anyway.

Dividend is paid out of the profits of the company in the same proportion as shareholding. So say, the total dividend was £100, he would get £90 and you get £10. If he has been paying himself a dividend, then he owes you the dividend on your 10%.

However, terminology gets muddled in small companies and what your mum is calling dividend may well be something else. His accountant will be telling him that if he pays himself a dividend he has to pay you too and suggesting ways to do that (if that's what he wants)

That said, dividends are a tax efficient way of taking profits out of a small business, so maybe they are dividends and you are owed. The accounts should show you any dividends paid.

You will pay tax on dividends whether you take the cash or not, so if they are declaring a dividend you owe tax on it. If they're not declaring dividends you have no tax liability.

It depends on the classes of share in issue and the rights attaching to the shares as to whether you are entitled to a dividend. If he is paying himself a dividend and you both have the same type of shares then you are also entitled to a dividend proportionately.

There may be back dated dividends if you've owned shares for 2 accounting periods. Or his dividend could be said to relate to a year when you didn't own shares (could have been declared in the past but not paid). In the future he then may decide to not pay any dividends to avoid paying them to you.

In the absence of divis your way of getting money out if the shares are if the company is sold or otherwise wound up.

Articles of association off companies house may explain the rights you hold. Tbh sounds like you need the advice of an accountant or a lawyer.

You should be aware that a company can be worth more than just its assets less its liabilities. That's a floor value. Depending on how much profit a company makes on those assets. as a minority shareholder the value of your stake will be much less than a share if the total value due to your reduced rights.

The company will have been valued for probate purposes but that won't mean much as the inland revenue agree these things without prejudice so no one makes too much of an effort if there isn't significant tax at stake.

Hmm, sounds as though I've been left a worthless token gesture. Have no relationship with my brother (he manipulates everyone around him inc father- hence my 'legacy') -so personally i couldn't care less what happens to his business- but doesn't sound as though this would even recoup solicitor's fees in attempting to investigate. ho hum...

AA small list and AR01 full list are the only documents he's submitted. I bought AR01 which list 300 shares and still say they are held by him and dad. Where would I find the annual financial statement please?

You want the AA. When companies have turnover below a certain threshold they only need to file abbreviated accounts with Companies House rather than full ones and this seems to be the case here. But they still give you some information. The accounts should also show the company accountant's details so you could contact them for more info. Your brother should have notified Companies House of your father's death and the shareholder record should have been amended to show that you own 30 shares. Again this is something the accountant often does so you could ask them for advice. Who was the executor of your father's estate ? They really should have dealt with this.

Thanks poshfrock. Executor was my brother!

It wouldn't cost much for a lawyer to take a look at this for you, it would probably take me less than an hour to review the articles etc and tell you what the score was and whether it was worth pursuing, so say £250 for an initial opinion.

I've just had a look at the AA. It shows the worth etc but no details of dividends. I presume if I contact the accountant my brother will be informed?

If you decide not to consult a solicestor or if they advise you that it's not worth pursuing could you send a letter asking your brother for a 'token' one off amount to settle the matter. Say £5k or £10k.

As a shareholder I believe you are entitled to receive a copy of the full (more detailed) accounts prepared by the company, not just the abbreviated accounts filed at Companies House. These will show dividends paid out.

Write to the company's registered office (shown on the record accessible on-line at Companies House) and request copies of all sets of accounts covering the period since your inherited your father's shares.

Use the AR01 to see whether your brother and Dad both held the same class of shares. If so and if there have been dividends paid in the last three years, then you could be entitled to your 10%.

You could consider using a solicitor to go through the letter before you send it but this is a fairly straightforward matter initially and you may want to save your funds for if your brother ignores your letter or gets difficult about the matter.

Please don't let the matter rest, your father's wishes are not being respected by your brother.

Thanks littlepurplealien. The previous company report stated dad and brother held equal shares. The most recent states brother holds them all. I will write to the company to request the accounts and see if he responds. Or do you think I should write directly to his accountant?

Just read the AR01 again. Brother is named as shareholder for half the shares and for the other 50% of the shares brother is named as shareholder as executor for dad. How long would it be before he is obliged to transfer some of these over and name me in the accounts? if ever?

Shareholders aren't named in the accounts , just on the annual return although there may be a disclosure as to the number of shares held by anyone who is a director of the company.

Has probate all been dealt with and sorted out ?

I'm guessing you need to speak to any solicitor involved in connection with it. If there is none then considering consulting one.

It's not a token. If your brother and father made a living off this then you are already being deprived your share of your fathers portion. A 10% shareholding isn't very fair. 25% would be fairer.

Whatever you do don't accept £5k or £10k in settlement for the shares. If the company has assets if £1m then I'd say the minority share holding could be worth £30-40k minimum. That's before considering what can be taken out in dividends.

Why don't you try having a discussion with your brother first if dealings can be kept civil. Ask him when probate will be finalised (there's a revenue deadline on this so should be final by now). What he plans to do about your stake in the company? Keep your cards close to your chest, don't demand anything but don't suggest you're going to settle for being fobbed off. Just see what he thinks he can do. Is he very greedy?

Yes he is very greedy and self interested, he would have knocked father down to the 10% (i know dad wanted to give me more but brother accompanied him to all the will meetings and dad was quite unwell at the end). I don't think it's a personal thing as he's been difficult and evasive with dad's wife too- she is one of the main beneficiaries but brother persuaded dad to make him sole executor. He will begrudge giving me a penny. I wouldn't be at all surprised if he chose to pay more in tax through taking a bigger wage, than the alternative of paying me a small dividend. I will ask him where probate is at as suggested and see if we can resolve this amicably. Thanks all.