company share holder needs help!

FM13

best to remove this and sort it out now by completly removing myself from the company.

TheCostumeShop.ie: Ronan

Go to a solicitor quickly, as a company director you are responsible for signing off on the books and keeping everything legal. At a 5% stake it's not worth the risk of going to Jail you either want to get out or get him out.

Don't take it personally - I know it's hard to accept but he's probably not out to harm you, he's just having a difficult time and going off the rails. Still it sounds like what he's doing is fraud and it has serious consequences.

You never know, he might be delighted to have an exit option and might sell you the entire business at a discount which you could pay out of future earnings because he wants a clean start after the divorce. Have your accountants - independent ones to the firm he uses value the company and do due diligence to make sure you don't end up holding a lemon at the end though.

Bigcheeze

It sounds like the OP is a shareholder, not a director.

Don't run to a solicitor...yet. That should be a last resort and will potentially destroy any working relationship with your father.

You need to sit down and talk to your father about the future of the business, what he wants from you - put it on the table if you think he doesn't want you around.

If he does want you around, make it clear what you expect your role to be, your ambitions (e.g. do you see yourself as taking over from him).

Is he near to retirement age ? What are his succession plans, if any, or does he just see himself selling off the business in the future ?

This is your father's business so if he doesn't want you to be a part of it, you won't be part of it. You're better off accepting that and moving on to to do something more productive with your life. But you won't know any of this by talking to "sources", you need to talk to him.


I'd probably park the profit manipulation thing for now. You probably don't want to get involved in the divorce.

TheCostumeShop.ie: Ronan

Good point, it's a different situation if your not a director. My assumption here that OP is a director is based on the share split, since there is only 2 shareholders it is more than likely that there is not a second director who does not hold shares. All businesses require two directors.

Going to a solicitor is confidential though and definitely worth the price because as the main sales person who may be legally responsible. Definitely worth keeping it and the advice you receive on the hush hush.

J.Ryan

It sounds like you suspect that there is a fraud, on that basis I would suggest that you speak to an indepentant Solicitor (neither of your parents) and an independant accountant, there are too many issues, could you be considered a shadow director, if you are not a director already, afterall you deal with 90% of the customers and have access to the books and records.

J.Ryan

Just another thought, if it is a fraud, the comapny will also be submitting false CT returns and there could also be money laundering issues.

antoinolachtnai

There wouldn't necessarily be a tax issue, since the money will show as a profit on someone else's P+L. The biggest fraud issue (if there is one and it's not clear there is) is in relation to the divorce.

This is a very serious family situation and you are going to find yourself under a lot of pressure to choose a side. You are going to have to be very careful and considered about what you do.

J.Ryan

antoinolachtnai wrote: »

There wouldn't necessarily be a tax issue, since the money will show as a profit on someone else's P+L. The biggest fraud issue (if there is one and it's not clear there is) is in relation to the divorce.....

It would be a tax issue for that company. The other persons P & L is nothing to do with the company.

I think we are in danger of taking this off topic, I think that the OP should get independent professional advice.

dbran

Hi

Dont know how keeping false books and records with false payments that make a profit into a loss cannot be a tax isue or a fraud issue. Its definately a criminal offense. Whether or not they turn up in somene elses books is not relevant.

As the others have said you will need to tread very carefully in this regard as there are also family issues involved. If you are just a shareholder then there is little to worry about as the shareholder is not responsble for the day to day running of the company. I take that point that J Ryan said about being a shadow director but this could be difficult to prove in reality as it could be difficult to show how much you knew or didnt know at the time.

If you are a director (say 1 of 2 directors) then this is a different kettle of fish as you are equally responsible for running the company on a day to day basis even though you only may only have 5% of the shares.

Try to speak to your father and gauge his reaction. If this does not go well then you should consider resigning as a director by filing a B69 in the CRO. But you need to think carefully before you do this.

Good luck

dbran

J.Ryan

dbran wrote: »

Hi

.... I take that point that J Ryan said about being a shadow director but this could be difficult to prove in reality as it could be difficult to show how much you knew or didnt know at the time....

Agreed, but would like to be on the receiving end of that action, this is a small country and mud sticks.

antoinolachtnai

If X makes a payment to Y, and X doesnt complain that he has been deceived or somehow short-changed, it is really hard to say that the payment is a fraud. In this case, there is no deception, and there is no straightforward gain for the OP's father.

It is hard to say that the recipient did not deliver value for the money paid. Even if you could prove he didn't, it doesn't mean that it was a fraud. It just means it was a bad deal.

In terms of tax, it sounds like the transaction has been correctly recorded. The profit from the transaction should be recorded in the recipient's books and he will pay tax on it. If everything is correctly recorded, there is really nothing for the taxman to fault, he gets his money either way.

The OP does have recourse to the courts for oppression of his minority interest (see for example http://www.mlaw.ie/news/principle-legal-remedies-of-oppressed-minority-shareholders). But this is expensive and difficult to do and there is a high probability of losing.

Going by the facts presented, it is extremely, extremely unlikely that the OP would be regarded as a shadow director, since he clearly does not direct the activities of the company. Still, I suppose it is possible.

It would be very wise to get legal advice, and also commercial and accounting advice. I don't know if it will actually do any good though. What the OP has is fundamentally a family problem.

J.Ryan

antoinolachtnai wrote: »

If X makes a payment to Y, and X doesnt complain that he has been deceived or somehow short-changed, it is really hard to say that the payment is a fraud. In this case, there is no deception, and there is no straightforward gain for the OP's father.

It is hard to say that the recipient did not deliver value for the money paid. Even if you could prove he didn't, it doesn't mean that it was a fraud. It just means it was a bad deal.

X made the payment to Y on behalf of Z, X has a statutory duty to safeguard the assets of Z. X and Z are seperate legal entities, end of story.

antoinolachtnai wrote: »

In terms of tax, it sounds like the transaction has been correctly recorded. The profit from the transaction should be recorded in the recipient's books and he will pay tax on it. If everything is correctly recorded, there is really nothing for the taxman to fault, he gets his money either way.

So you are certain that Y (in this case) is declaring these invoices (according to the OP the goods were never delivered), or that Y doesn't have trading losses to offset this income (a very interesting conversation I had with a Revenue Auditor a couple of years ago, regarding transfer pricing), another long shot is that Y could be accused of Money Laundering if he put a fraudulant transaction through his tax return. The Revenue are not stupid, never underestimate them or their powers.

antoinolachtnai wrote: »

The OP does have recourse to the courts for oppression of his minority interest (see for example http://www.mlaw.ie/news/principle-legal-remedies-of-oppressed-minority-shareholders). But this is expensive and difficult to do and there is a high probability of losing.

No comment

antoinolachtnai wrote: »

Going by the facts presented, it is extremely, extremely unlikely that the OP would be regarded as a shadow director, since he clearly does not direct the activities of the company. Still, I suppose it is possible.

Its the perception, family company, activily involved with the customers, again as posted earlier I agree its a long shot, but why take the risk.

antoinolachtnai wrote: »

It would be very wise to get legal advice, and also commercial and accounting advice. I don't know if it will actually do any good though. What the OP has is fundamentally a family problem.

Its a family problem that could have expanded into various other issues, if the OP is correct in his/her original assumptions.

antoinolachtnai

J.Ryan wrote: »

X made the payment to Y on behalf of Z, X has a statutory duty to safeguard the assets of Z. X and Z are seperate legal entities, end of story.

In theory, sure, but in practice, very hard to enforce. It is up to the shareholders to enforce this either through a director's meeting, an AGM or an oppression action. There are really no other options.

So you are certain that Y (in this case) is declaring these invoices (according to the OP the goods were never delivered), or that Y doesn't have trading losses to offset this income (a very interesting conversation I had with a Revenue Auditor a couple of years ago, regarding transfer pricing),

Sure, it's possible. But there really aren't facts there to point to this and the OP is unlikely to get access to the facts. This is more likely to be investigated where it happens between companies with similar ownerships.

another long shot is that Y could be accused of Money Laundering if he put a fraudulant transaction through his tax return.

Well, that is Y's problem. But first the revenue would have to show the transaction was fraudulent. But there is no clear fraud there that I can see.

The Revenue are not stupid, never underestimate them or their powers.

Sure, they can do anything they like, but why would they in this case? If they do anything, they will do it against the outside party, because he is the guy who actually got the money.

Its a family problem that could have expanded into various other issues, if the OP is correct in his/her original assumptions.

For sure. But it is a matter of identifying the core of the problem.

Anyway, the OP has taken his problem off-line (probably wisely).

barneystinson

Sorry to jump on the bandwagon, given that I haven't read the original OP, but based on what I'm reading the words money laundering spring to mind? (unless I'm misreading, in which case apologies!) And as the accountants on here will know, the company's (or companies') accountant could be leaving his arse hanging out as well... but of course I'm sure he won't have known anything if the proverbial hits the fan!