david_hornet27
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| posted on 23/10/12 at 06:07 PM |
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OT - Being fleeced after parents divorce
As Locostbuilders seems to be the font of all knowledge I thought I would see if anyone here can give me advice 
Around 20 years ago before I had really grown up I inherited a 1/5 share of around £400K, the other beneficiaries were my brothers and sisters and my
mother. To cut a long story short, our stepfather had been out of work for a few years and to help him and our mother out we agreed to invest all of
our money into a nursing home with the guarantee that our stepfather would run the business and also be a director. The money we put in was for a
quarter share of the whole business and there are 3 other shareholders who are also directors.
The business has remained solvent, although it doesn't make a huge amount of money as my stepfather is a lazy so and so and the other
shareholders are willing to just let him plod on.
Around 5 years ago my mother and stepfather divorced and as part of the settlement my stepfather claimed he was the owner of the share in the
business! After spending around £10K on legal fees we proved otherwise and have managed to secure the shares and have been receiving monthly
dividends for a few years. Not a huge amount of money, but enough to be worthwhile. Although he has remained in his job as General Manager my
stepfather has had his directors role taken away and none of us were allowed to assume this role once we regained our share of the business as the
remaining directors refused.
We have no input into how the business is run. I have attended shareholders meetings yearly which always give information that the business is
plodding along and making a small amount of profit, although the accounts are very vague and none of the directors are ever able to be very specific
about the details. The most recent meeting was in September and it was the same old story that the business is doing OK, and there was no mention of
any impending problems that would affect the business' ability to pay out dividends in the future.
Guess what! No dividend this month! I emailed the most involved director and asked whether there had been a dividend paid this month as I had not
received mine. The reply (a week later) was one line which read 'There have been no dividends paid out recently'.
No detail as to why, or whether this will be ongoing.
I am worried that they could decide to pay no dividends in the future and instead replace them with 'directors remuneration'. This in
effect would mean they could share any profit between themselves and cut us out completely from any profit the business makes.
My feeling is that we are in a position where we are at the mercy of the directors and there is nothing we can do. Unless anyone can see something I
can't.
If you have got this far into my ramble then well done! Any advice very much appreciated!
Thanks,
Dave.
[Edited on 25/10/12 by david_hornet27]
'If everything seems under control you're just not going fast enough' - Mario Andretti
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pekwah1
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| posted on 23/10/12 at 06:13 PM |
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have you not considered selling your share?
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mookaloid
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| posted on 23/10/12 at 06:22 PM |
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Bit of a mine field, but basically you need to get some more legal advice and get enough shareholders together who hold more than 50% of the shares
together to be able to have any influence - eg to restrict directors remuneration.
My gut reaction is that you really want to get someone to buy your shares from you so that you don't have the headache any longer - perhaps one
of the other directors would like to increase his holding in order to gain more control over the business and to increase his income from the
business.
"That thing you're thinking - it wont be that."
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david_hornet27
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| posted on 23/10/12 at 06:26 PM |
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I would love to sell my share but who would be interested in buying into something that may or may not pay a dividend, and where you get very limited
information as to what is happening with your investment?
The only people I can see being interested are the other shareholders and they hold all the aces so can name a stupid price. Really they have no
incentive to buy as they have total control over the business and there is nothing we can do about it.
Thanks anyway, all ideas welcome!
'If everything seems under control you're just not going fast enough' - Mario Andretti
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david_hornet27
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| posted on 23/10/12 at 06:30 PM |
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This doesn't look good! lol
Two of the other 3 shareholders are father and son so in effect they hold a 50% share between them. The third is elderly and is not interested in the
headache. Unfortunately I do not have the funds to buy her share as that would be my preferred option.
'If everything seems under control you're just not going fast enough' - Mario Andretti
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StevieB
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| posted on 23/10/12 at 06:30 PM |
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Sounds like you need to take some preliminary advice from a company law specialist.
I'm fairly sure that all dividends and directors remunerations have to be voted for by shareholders and unless you've been invited to
attend a meeting that you didn't go to, then you might have something to take them up on.
A decent company lawyer will cost some money to speak with, but sounds like you have enough invested to justify the cost.
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motorcycle_mayhem
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| posted on 23/10/12 at 06:38 PM |
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I believe that the only people that will benefit from the situation will be the directors and the legal team. I would be very cautious about pursuing
the legal situation here, life is too short and (I'm assuming) you have one to be getting on with. It sounds like the Directors, acting
together, without your best interests at heart, are a formidible force. I would sell your shareholding and move on.
However if it bugs you, get the lawyers on your payroll.
No, I have little personal experience of your exact situation, though I have endured some of the dark things that happen when money and family death
are involved. My experience is that greed will endure and exceed all, those with the most greed will get what they want. Your needs may be different.
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Dusty
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| posted on 23/10/12 at 06:45 PM |
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There are solicitors who specialise in company law. Get yourself one. He/she needs to be unconnected with the company and the directors and needs to
be as tough as the directors. The directors are just employees of the company. They have various legal duties to the shareholders and a majority of
the shareholders should have all the power. You don't want to be fighting the directors but if it comes to the crunch they have to fulfil their
legal duties (they have to fulfil them anyway), one of which is to publish genuine annual accounts for the shareholders. Your directors run the
company using the shareholders capital and are brushing you off. Time to play hardball. If you can show any improper behaviour on their part they can
be fired and you can get new ones in to run the company the way the shareholders wish.
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mookaloid
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| posted on 23/10/12 at 06:46 PM |
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interesting web site here http://www.companylawclub.co.uk/
having a look at the articles of association and memorandum of agreement for your company might reveal some useful info - either to see if the
directors are abusing their position or to see if they are entirely within their rights to do what they are doing.
Can't say I'm hopeful though 
"That thing you're thinking - it wont be that."
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david_hornet27
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| posted on 23/10/12 at 06:49 PM |
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Yes I think you are probably right motorcycle-mayhem. Nothing about human nature really shocks me after this whole sorry affair.
I think my best bet is to sit tight and hope one day the business will be sold and I get my original investment back. If not, then as you say life is
too short and I have a young family to think about.
I am lucky that I have got a good secure job, but don't really want to use my spare income to pay huge legal fees.
Thanks everyone for all the replies so far, has cleared my mind a little...
[Edited on 25/10/12 by david_hornet27]
'If everything seems under control you're just not going fast enough' - Mario Andretti
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david_hornet27
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| posted on 23/10/12 at 06:50 PM |
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Thanks for the link mookaloid - will take a look and see if there is any improper behavior as Dusty put it!
[Edited on 23/10/12 by david_hornet27]
'If everything seems under control you're just not going fast enough' - Mario Andretti
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RK
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| posted on 23/10/12 at 07:25 PM |
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The sad part is that the new legal people might take their time, making it all a waste of money. This is to me, the biggest risk.
Apart from that, you should be able to get to the bottom of it, if nothing else. It does sound like the foxes are in charge of the henhouse though,
doesn't it? We had a situation in our family, after the death of my mother, whereby merely asking questions, sent my aunt (not a blood relative,
but the one doing the yearly books etc) into orbit, causing me unneeded grief for years. I hired an outside legal person to satisfy myself, but most
of the rest of the family held it against me, even though I thought we should all know what it was about. They didn't care as long as they got
their few hundred every year.
So the "directors" in this case, are not in a hurry to be nice, from what you've said.
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big-vee-twin
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| posted on 23/10/12 at 08:18 PM |
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Why don't you get a copy of the audited accounts and see how much money has been paid to Directors and share holders
You can get a copy from companies house for £1.
In my experience of being involved in the design and construction of some nursing homes they are usually very lucrative
Duratec Engine is fitted, MS2 Extra V3 is assembled and tested, engine running, car now built. IVA passed 26/02/2016
http://www.triangleltd.com
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NeilP
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| posted on 23/10/12 at 08:24 PM |
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A board report to and are employed by the shareholders - you (collectively) have all of the power here. Director's remuneration (total package)
and dividend policy are matters for shareholder approval. If you can get the other shareholders onside then you can oust the lot. You don't
need expensive legal advice on this. All fairly standard stuff. As stated above, you need to have the current shareholders agreement and the
articles of association and then go see a lawyer.
HTH
If you pay peanuts...
Mentale, yar? Yar, mentale!
Drive it like you stole it!
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plentywahalla
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| posted on 23/10/12 at 09:28 PM |
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Forget wasting money on solicitors. The legal position is quite straightforward, as minority shareholders you have very little power other than to
audit the activities of the directors/majority shareholders. It sounds more like you need a good forensic accountant to look at the books to see why
the business is not making enough money to pay out a dividend.
Its a bit late now, but a corporate lawyers advice would have been useful when the original investment was made. He would have advised that as you had
no representation on the board, the money should put in as a loan, or as preference shares rather than ordinary shares.
Good luck. Its a tricky problem.
Rules are for the guidance of wise men ... and the obedience of fools. (anon)
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JonnyS
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| posted on 24/10/12 at 12:19 PM |
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Haven't read all the replies, but this is my advice as a Chartered Accountant...
You are a shareholder, albeit a minority one. You have rights. You are also in a very unusual situation. You don't need to find a good lawyer,
but if you don't, you'll probably be left without anything to show for your investment. I've seen this happen quite a few times.
Ask for the FULL accounts for the the last three years. As a shareholder it is your right to receive them. If you want to, I'll have a look at
them for you. We deal with many care homes, so I know what they should look like. The accounts at Companies House won't give you the information
you need.
If you do get a lawyer on the case, you need a good corporate lawyer. Within no time, you will have some control over the business.
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bobinspain
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| posted on 24/10/12 at 08:08 PM |
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Many years ago, I used to do Inheritance planning, involving writing trusts for very large estates.
Most of my work was predicated on the fact that the trustees will adhere to the settlors' wishes. Very seldom did I come across acrimony.
In your case, I really would seek specialist advice, (legal). Work out what you want to achieve and what you're prepared to pay to reach a
desired conclusion. Many law firms will give you a 'free hours consultation.' Use two or three of them.
Remember, 'knowledge is power.'
Good luck.
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david_hornet27
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| posted on 24/10/12 at 08:18 PM |
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Thank you all for the advice and for giving me a fresh perspective on this! If nothing else it has given me a little more motivation to try to sort
this mess out.
The good luck wishes and offers of help have also been very gladly received.
'If everything seems under control you're just not going fast enough' - Mario Andretti
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