Was my ex right to resign me as director?

[hatforhatter]

I’m going through a really awful time with a separation with a man who had an affair and walked out on us. We was not married and I was not on the mortgage. We have three children.

My security was in that we were joint owners of a business 50/50 shares. After he walked out I discovered via company’s house he had resigned me to prevent me seeing in the accounts. I do still own 50% shares and receive a salary which he dictates. Does anyone know legally where I stand?

I feel scared to do anything in case he closes the business down or stops paying. The payments are instead of child maintenance.

I have an appointment with a solicitor coming up. I don’t really know what I should be asking. Can anyone help.

Thank you.

I am sorry to hear about your situation. My guess is an accountant might be able to give an answer.

Your legal position is that legally he cannot remove you like that. The procedure is that he needed to give notice to the company and the shareholders should then vote. In practice that means that you have to agree as you have 50/50 shares. (There are some other ways too but they don't seem appliable)

I would take legal advice

I am assuming here there is nothing in the articles of association saying it was a fixed term appointment etc.

What type of business is it op? Is it just him and his skills or are there employees and property/assets etc. The latter will be harder for him to wriggle out of.

Shouldn't he technically be paying both maintenance AND profits from the business if you are a 50 percent owner? Have you done a child maintenance calculation to work out what he should be giving you to compare?

Hi all it is a company that is essentially his skills. A lot of work abroad predominantly in the states.

We was joint directors, there was nothing in the articles of association I could see they were very standard.

I do hold the shares. The company does currently have a bounce back loan from the pandemic days at it was an industry that completely stopped. The expenses are very low as all living costs are paid by the contractors.

Is the directorship important or is it just the shares that matter?
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Hold 50% of the shares that meant to read!

The shares give you part ownership of the business. The directorship gives you a measure of control over and responsibility for the business. As a shareholder you are entitled to see the annual accounts but don't have access to any bank accounts. As a director you may have access to bank accounts. If the business pays a dividend, all shareholders must receive the same amount per share.

You need to see a solicitor who specialised in business law.

Presumably the business uses a firm of accountants to prepare the final accounts and submit them to Companies House. Are they aware of what's going on, or do you think they are acting solely in your ex's interests now?

What does it say on Companies House about the directors now? There should be some sort of document available about your removal.

As far as I am aware, you can't just get rid of a director like that. The director has to resign, or be voted out, is prevented from being a director by a court or law, become bankrupt, or is physically/mentally deemed incapable by a doctor.

It would seem to me that your ex has not acted in the correct manner here. You need urgent legal advice from a solicitor who specialises in this sort of thing. Accountants should also know the correct process, so maybe you could ask your accountant whether they are aware of the situation, and if they are, what they were told.

As others have pointed out he needs to get your agreement to make you resign as a director and to buy your shares of you.

Due to the type of business it is, he could easily set up a new business and leave you responsible for the debts in the old business. I am aware of a few people who have done that to ex-partners and even other family members.

Also if he is paying himself a low salary and dividends then you won't get very much going through the CMS.

Unfortunately, you are in a precarious position so you need to take legal advice.

I think the accountant is working in the exs best interest. On companies house it simply states my name and that I resigned.

So ex has another business he also takes dividends from to keep his salary low. He is a high earner and turns over 6 figures.

He told me we could not take dividends until the bounce back loan is paid off?

Dividends cannot be paid from a Bounce Back Loan. However, if the business makes a profit after any repayments on the loan, it can distribute a dividend.