Buying out the other director

[conned tractor]

Plan B has had some issues regarding differencs of opinion between myself and the other director and we have decided to part company, me carrying on with the comany and him recieving some sort of remuneration for his input.

I have put in 75% of the capital, 20% has been recieved by means of a grant, and around 5% by the other director.

He is my mate, he was down on his luck and struggling to find a job, so I had the bright idea of setting up this business as a plan B. I would put the money in and he would do the organising etc. It's turned into a bit of a nightmare. To be honest, the workhe has put in over the last six months probably represents a day a week. We have had fights over everything, he thinks it should be my responsibility to look after everything and him only the fluffy stuff, we even had an argument over him not chasing an invoice the other day (14 days overdue), which got heated, and we have some cashflow issues.

So, I dropped it on him tonight, said I couldn't work with him and wanted to offer him a fair price to see him alright, as we go back a long way (but he's fooking me over I feel - wants the reward without the input).

The question is how do we come to a fair price?

[AtW]

The question is how do we come to a fair price?

Only you can know that, if Plan B is worth it I'd suggest make him attractive cash offer (even if it's hard) but make sure he signs all paperwork - this can cost you a LOT in the future if Plan B is successful.

Not a lawyer, but if you control 75%+ of shares in the company you should be able to remove him from executive control or employment, and keep him as just shareholder of 5% being entitled to his share in dividend etc. Would not recommend playing hardball too early though - best find some cash (if it's worth it) and get it all written down proper.

Good luck.

[realityhack]

You really need to speak to your solicitor/accountant about this, ideally before you'd spoken to him, but still - to get a fair idea of what he's legally entitled to, to understand how the contract law binds you both, and to proceed from there.

[conned tractor]

Only you can know that, if Plan B is worth it I'd suggest make him attractive cash offer (even if it's hard) but make sure he signs all paperwork - this can cost you a LOT in the future if Plan B is successful.

Not a lawyer, but if you control 75%+ of shares in the company you should be able to remove him from executive control or employment, and keep him as just shareholder of 5% being entitled to his share in dividend etc. Would not recommend playing hardball too early though - best find some cash (if it's worth it) and get it all written down proper.

Good luck.

Shareholding is 50/50 currently, meeting accountant early next week to sort some paperwork so may brief him before this meeting so that he can prepare necessary paperwork.

[AtW]

Shareholding is 50/50 currently

That does not sound good.

If you did not go too far with your plan B and he is unreasonable , then consider offering to liquidate company or just say you'll move to form new one and he'll have to manage himself.

[conned tractor]

You really need to speak to your solicitor/accountant about this, ideally before you'd spoken to him, but still - to get a fair idea of what he's legally entitled to, to understand how the contract law binds you both, and to proceed from there.

He said he'd happily sign over the company. I'd like to see him alright, so that he hasn't done it for nothing. (but this is all spoken).

The question is in the value, as we have only sold, well, not a lot so far (10% of break-even point in the last month although these are only initial sales).

Could I dissolve(?) the company (as assets probably only cover my investment) and restart a new company? I expect this requires a bit of paperwork.

[realityhack]

INAA/L, but I'd try and keep it as simple as possible - if he's happy to sign away - get it sorted while he's happy - perhaps get him to resign his directorship but award him shares commensurate with his equity holding as a goodwill gesture - so if the company grows he's effectively been forced to make a good investment. That way neither of you will feel like the prior effort has been for nothing. Like I said - seek prof advice.

[conned tractor]

Thanks both.

[conned tractor]

One thing I forgot to mention is I asked him to come back to me with a price that he was happy with.

[AtW]

One thing I forgot to mention is I asked him to come back to me with a price that he was happy with.

Make him your own offer, preferably in cash - explain how you arrived to it, explain difficulties of future work and that if company needs to stay afloat it might require shareholders to put in more resources like cash or face being dilluted (not a lawyer so don't assume my opinion is legal advice).

Basically explain that he can get out now with some cash and stay friends, or it won't work anyway and he'll lose the offer and you as a friend (that might be extreme but friends don't shaft each other in such situations).