Family business - difficult position

[erin30]

Hi.

I started a business with a close family member 12 years ago. At the time we had nothing and both worked round the clock for little and eventually got things off the ground. Two years later another immedeiate family member joined us and we made a 3 way partnership

I left the business 3 year ago. I won't go on and make this post very long, but needless to say working in the business with partner number 1 (managing partner) was making me ill. He was very unfair and I felt taken advantage of. He was paying himself double, and giving silly reasons (like I was a Mum) and generally making me stressed out and felt bullied.

At the time I left there was my two partners and another family member had joined as a salaried employee. So I no longer work there, but still own a portion of the business and my family still run it.

However, I have never seen a penny from it.

The business makes a great profit (sales in the millions, increases every year) btu what they do is instead of showing a "profit", they just pay themselves more. So if the company makes a £100,000 profit they just all get a new car, a free holiday and a salary bump to share it between the three of them.

then I get told there's no "profit" to share.

I have let this go for a very long time, but I'm a single parent of a SN child and frequently my "family" members will offer to help me out, lend me money or pay a bill for me - but I can't help feeling like this makes me a charity case while each one of them has their rent, bills, holidays, cars paid for an an exhorbitant salary when what they should really be doing (if they genuinely wanted to help me) is pay themselves a normal market - rate salary, without all the extras and then fairly sharing profits out between the shareholders of the business.

To put this in perspective, the family member who joined last is an admin person and gets paid £70,000.

As you can see...this is a joke.

I feel miffed to say the least as I built the company from nothing, feel like I was bullied out (for exactly this reason as I felt business practices were dodgy and he didn't like being questioned and wanted me gone so he could do stuff like this) and like as a shareholder I should get something.

I think the way they all see it is that I left so it's nothing to do with me anymore.

WWYD?

I don't want to take them to court or fall out with my family over money. I do have my shares legally held but have no access to anything else.

Is there some clever way of going about this without falling out?

I do work.

I was ill for two years - really ill - OCD very bad and anxiety issues but went into therapy for two years.

found I was no longer much on the job market so started my own busines again. I know, deep down, I can do it again -this time without him but like with anything it will take a few years to get off the ground and I rely on tax credits and get no maintance payments or anything so it's very hard.

With DS, it was very important to me to be around for him.

Post on the legal board to get some tips?

I get where you're coming from re wanting to play him at his own game. It's not manipulative, it's canny.

I think I might go and find out from a lawyer what my rights are anyway.

Just so I know.

Bloody hell OP, you have to see a solicitor!
Even if it's not to take a penny out of this business, you have to find out how to limit your liability.
From everything you've said about him, that is a tax evasion bomb waiting to go off.
Maybe you can limit future liability by just persuading him to buy you out - even if it's for not a lot.
Maybe you need to be whistleblowing.
I don't know - I know nothing about company law and how limited your liability is anyway.
But come on - I know you're scared, but one day that company is going to blow up big style.
SEE A LAWYER!

You're right and to be honest I'd never even thought about it. I know we have good accountants and so just assumed it was all above board. I will go and see a lawyer and just chat it out.

I'll also try and think of some way to get around this without taking him to court or threatening to.

I know I should be tougher, but I am honestly worn down from it, and worry for my health getting embroiled in it all again.

I am actually poor and happy now! I know that might be hard to understand, but it was all just so awful and now I might have money worries and be back to square one, but I feel free and back in control and happy in a peaceful sense

You do need to seek legal advice. You can access company accounts online which will show you a financial breakdown but from what you have said there isn't anything to see that will give you leverage.

Four possible options spring to mind:

1. Since it is family, can you either get other members of the family (outwith the business eg a parent) to put emotional pressure on him?

2. I would have a chat with the solicitor about putting the shares into trust for your DS (I'm not sure if that's possible or not) but then you could be more assertive because it's about your DS being provided for iyswim or say it's a lawyer acting for DS who is being pushy?

3. Another option is to ask them to buy you out which, to get a fair price, would mean the company would need to be valued and all the assets taken into account. If he is being devious or underhand in any way, then he won't want someone assessing the asset value of the company. (Your shares will be worth less than their %. To put it simply, if you have 25% of the shares, it won't equate to a quarter of the value of the company because the other shareholders can make decisions without you but they will still be worth something)

4. Tell them you are going to sell the shares to someone else. Tell them X person has made you an offer of £xxxx for the shares and you just can't refuse. The company still needs to be valued and they then also have to consider bringing someone new into the company who probably wouldn't be as easy to manage.

For all of the above, I would still speak to a solicitor to be entirely sure where you stand before you make your move.

If it makes sense...the money is not worth going through that kind of stress again. So I'd rather do without it than get dragged down into it. I suppose I was just hoping there was a clever little idea to get it given to me voluntarily or if thre was some little loophole or magic trick I hadn't thought of.

I know I probably sound like a total idiot walking away from that sort of money, and I really am not a weak person but if you'd been there you'd know what I mean. The mind games had me feeling so bad and it took so long to get better and get my self esteem back.

Can't go though it again.

It's not clear from your posts but is this a limited company or a partnership? If limited are you still down as a director at companies house or just a shareholder?

APlaceonhtecouch, cross post there but before I read your entire post THANK YOU! Option 2 sounds like EXACTLY what would work!!

There is no way he could come back at me if I said it was DS (he hates looking bad) so if I go and say it's to do with DSs trust and figure a way to appiint some sort of independent trustee that would work amazingly well!!!!

THANK YOU

Will read the rest now

xxxxxxx

Sorry very, not a director anymore - but a shareholder.

Forgot to add, also have a look at the accounts to see if they are taking salaries or a mix of salaries and dividends. If it's the latter (which is more tax efficient) then your dividends as a shareholder should still be sitting in the company, and you can take them out at any time. It sounds as though your relative will be hoping you are unaware, but the accounts will show the dividend pot and if the accountant checks back, it will also show that you haven't taken your dividends for the last 3 years.

I also think it is unclear whether it was a limited company with you holding shares or a partnership. They are different trading formats.??If it was a partnership accounts do not have to be registered at companies house. If it was a partnership did you have a partnership agreement?

There is no way he could come back at me if I said it was DS (he hates looking bad)
Oh good - he sounds like a typical narcissist. You probably do have to ensure all your family knows when you/the trustee ask him for funds for your DS. He has no qualms about treating you appallingly but his public self image will be important to him.
I do hope it works. You deserve to benefit from your hard work.

It's a limited company, I think, and I hold shares. Definitely not a partnership.

In the early days, I was very stupid and just singed "whatever".

We were actually meant to be 50/50 shareholders but he fiddled that and I did not notice until years later!

I think if I announced very loudly at a big family event that I was so pleased with my new business and was just getting finances in order for DS's future and had appointed him an independent trustee for both my current company and my old one and then announced my trustee would be coming in to check over the books - he would be absolutely and totally and utterly played at his own game and backed into a corner!

He can't stand looking bad. His self and public image is his only concern.

this is exactly what I meant about being a bit devious! You are a genuis! I would never have thought of that

thank you!!!

Ive spent years thining about this and tat never occured to me!

He can hardly attack me for worrying about DS.

I've been chewed up by a narc - I know exactly what you mean about the horror and the trauma. I fully understand you not wanting to disturb the beast.

He will crash btw. The time will come when he crashes and it will be spectacular. I've seen it enough times - though it takes its time!

Just remember there are no lows a narc won't go (bear that in mind). If you play it innocent and sweet, oblivious, that'll work. Don't let him see a glint of steel in you, always be doe-eyed. Don't let him get even a hint that you're challenging him.

If you Google 'the company's name and company check' , you will be able to see if it's a limited company or a limited partnership.

If you type in "companies house webcheck" you should be able to download all the documents held for £1 per document.

I would specifically look for the accounts, annual return and anything to do with share allocations.

If the accounts are abbreviated they won't really tell you an awful lot, but you will be able to ay least see if there are any retained profits.

One thing springs to mind - I wonder if they have issued another class of shares and are paying dividends on those rather than the class you hold.

If you check the annual return the shareholdings will be on there.

You need to see an accountant too. Question. Is it a Limited company do you know and if so are you a shareholder and if so do you know what shareholdings you have?. You mention a partnership and then a company

If it is limited and they or he won't let you see the accounts then you can get all the details from companies house.

wck2.companieshouse.gov.ukwcframe?name=accessCompanyInfo

If it is then it must be here it might be under a differing name i.e.
Ripoffs R US Ltd trading as really nice guys or similar. Can also put your name full name into goggle and that will bring up several sites that give info on directors of companies.

It might be that your part of a partnership if that's the case then you are entitled to be paid a wage for your work to take drawings and see the accounts and paperwork and books..

Make sure the accountant you see isnt the same one as they use if indeed the have one!. The revenue would be very interested if they aren't paying any tax or VAT due you can dob them in with them this often happens with a scorned wife who knows some malarkey has been going on in the firm. Either way you have been treated terribly!.

Thanks so much all of you for the great info, I wil do all these things!

I don't think you'll see any cash if I'm honest. This guy sounds like he's got it all sewn up. He could just liquidate the company and phoenix it. In fact he could have already done it. Get onto companies house as soon as you can - at least you'll know a bit more.

In addition when you seek further advice ask for the ' articles of association' of the company. These are part of the initial company set-up and often refer to terms under which new shares can be issued. They often say that any new shares have to be offered to existing shareholders first before being sold to others (called pre-emotion rights). If that stands then new shares cannot have been issued legally to others (ie the new family members) without you being offered them first.

What shareholding do you think you have? If you pm me the name of the company I can find some info out for you (am an accountant and know my way round Companies House).

Good luck with it all.

He can't stand looking bad. His self and public image is his only concern

In that case I can't help wondering how he feels about his spell in jail

I once worked for a serious cocaine addict and it wasn't pretty - this particular one considered himself he next Richard Branson, when in fact he was merely a crazed little runt. Luckily I got out fast, but when it all crashed down he took a lot of people with him ...

Which is precisely why you need legal advice, and fast