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Director wants to quit

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  • 13-04-2014 6:12pm
    #1
    Director wants to quit
    Registered Users Posts: 1 ✭


    Hi All. As the title says, I want to quit my directorship. I have 40% of a Ltd company in the restaurant business. The 60% put the finance in place and my 40% the concept. cooking and running of the place. Things are going slow and I feel its time to end this relationship. Question?
    Can I simply resign from my directorship by sending a form to CRO, or do I need permission from the 60% to do so?

    Thanks.


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    #2
    bucks
    Registered Users Posts: 410 ✭✭bucks


    What is your relationship like with the other director at the minute?

    In short, to resign you need to send a letter to the companies other director/s informing them of your resignation. If they accept they will file a B10 with the CRO and if there is only one other director then another will be appointed in your place. You will no longer be a director.

    If they don't accept or ignore your resignation then you will need to send another letter by registered post. If after a certain length of time (2 weeks if I remember correctly) you can file a B69 with the CRO. All this info is available on cro.ie so it is advisable to research it more there or talk to a professional.

    I urge you to choose the path of diplomacy however with regards to this and the other director/business partner otherwise things can become unnecessarily messy.

    Have ye a shareholders agreement in place?

    With you gone as a director are you stepping away from the business completely?

    You said you brought the concept, cooking and running off the place to the table, without you I am assuming there is no business?


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    #3
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    Director wants to quit wrote: »
    Hi All. As the title says, I want to quit my directorship. I have 40% of a Ltd company in the restaurant business. The 60% put the finance in place and my 40% the concept. cooking and running of the place. Things are going slow and I feel its time to end this relationship. Question?
    Can I simply resign from my directorship by sending a form to CRO, or do I need permission from the 60% to do so?

    Thanks.

    Your directorship is less a problem, than the fact that you own 40% of the company. You can't resign ownership of your shares.


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    #4
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    Hi

    You cant simply resign as a director as the resignation has to be approved by an existing board member of the company. Also if you resign, the company will have less then two directors and therefore your resignation is invalid under current company law.

    As for the B69, filing one is all well and good, but the resignation has to be valid in the first place and the only issue being that the company has failed to notify the CRO of your resignation. I dont think that this is the case here.

    I note from your post that you say that business is "slow". If you are thinking of resigning to get out of your obligations as a director of the company then the filing of a B69 would probably fail in court especially as you are the holder of 40% of the share capital of the company.

    The proper thing to do would be to sit down with the current director and decide where the company is going from here. If the answer to that question is nowhere then you cease trading immediately and shut down the company.

    Best Regards

    dbran


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    #5
    lucky john
    Registered Users Posts: 838 ✭✭✭lucky john


    Director wants to quit wrote: »
    Hi All. As the title says, I want to quit my directorship. I have 40% of a Ltd company in the restaurant business. The 60% put the finance in place and my 40% the concept. cooking and running of the place. Things are going slow and I feel its time to end this relationship. Question?
    Can I simply resign from my directorship by sending a form to CRO, or do I need permission from the 60% to do so?

    Thanks.

    I'm guessing you find yourself in awarkwad position. Your idea hasn't worked out and you want to walk away as fast as you can. You haven't put money in so you think you haven't much to lose and you can leave 60% to sort thing out. I'm also guessing that your not that good on company law and responsibility but I have a feeling your partner is. He was wise enough to set up as ltd to start with. I assume you also signed some form of legal agreement with this partner as well,or was it a close friend or family member?

    Unless 60% is a very silent partner he should have a good idea that things are not working out financially (if thats the problem) and may be happy to close up shop and walk away. If he/she doesn't see it that way then its a lot more complicated. You need to go to your accountant and get professional advice on this. As a shareholder in a ltd company you have very strict legal obligations you can't run from.


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    #6
    Trojan
    Registered Users Posts: 16,413 ✭✭✭✭Trojan


    I've been in similar situation... twice.

    In the first instance, I had a solid relationship with the other director, and we had actually both come to the same conclusion - i.e. wind down the company - separately before we met up to talk it through. We did so on good terms. I have the utmost respect for him and will gladly go into business with him again to this day.

    The other was more rocky - we had a big success early on - which actually was fairly damaging I think, and it limped on for a long time on the back of that success. Eventually we had a frank discussion about where it was at, and ultimately I resigned as director and reduced my shareholding very significantly, eventually to zero. I probably won't go into business with my co-director from this venture in future, but more because we have very different perspectives on business rather than any personal issue.

    I see this kind of issue as part of the learning curve of business. I think anyone in this situation should try to get through it as maturely as possible, without burning bridges. Be mindful of others personal and financial situations while doing the right thing for yourself.

    🎙️ The Recognized Authority Podcast



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    #7
    skelligs
    Closed Accounts Posts: 196 ✭✭skelligs


    barneystinson wrote: »
    Your directorship is less a problem, than the fact that you own 40% of the company. You can't resign ownership of your shares.
    being a shareholder doesn't mean you have responsibilities. Being a director brings very specific responsibilities that if not met can lead to fines, restriction and even jail (very rare). Being a shareholder just means looking after your own personal interest - you can only lose the value of the shares but nothing else.


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    #8
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    skelligs wrote: »
    being a shareholder doesn't mean you have responsibilities. Being a director brings very specific responsibilities that if not met can lead to fines, restriction and even jail (very rare). Being a shareholder just means looking after your own personal interest - you can only lose the value of the shares but nothing else.

    My point about the shareholding was that it is not simply a matter of resigning the directorship and walking away - the other guy is hardly likely to be happy to continue with someone else owning 40% of his business, and that's an issue that'll need to be addressed.


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    #9
    Peterdalkey
    Closed Accounts Posts: 2,091 ✭✭✭Peterdalkey


    barneystinson wrote: »
    My point about the shareholding was that it is not simply a matter of resigning the directorship and walking away - the other guy is hardly likely to be happy to continue with someone else owning 40% of his business, and that's an issue that'll need to be addressed.

    once an alternate director is appointed then that is simply not the OPs problem!! If he dont like it, he can do the other thing. Getting a new director in place is the key here or liquidate!


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    #10
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    Trojan wrote: »
    In the first instance, I had a solid relationship with the other director, and we had actually both come to the same conclusion - i.e. wind down the company - separately before we met up to talk it through. We did so on good terms. I have the utmost respect for him and will gladly go into business with him again to this day.
    Same thing here, company was profitable, just not profitable enough and after a bit of analysis, we really didn't see that improving in the future for various reasons. Anyhow, all very amicable, but the process of winding up a company is a lot more difficult than quitting a directorship, or at least annoyingly beurocratic.

    I do remember once signing a document on accepting a director change; it was a simple process - the 'new' director had been the real director for a long time but had put a relative down for various reasons.

    Like others, I'd see the shareholding as the biggest problem. If the company is 'limping along' and a director wants to bail, the cynic in me begins to think of debts in the background and potentially behaviour that could cause legal problems if it got to bankruptcy - "that money for the VAT man was just 'resting' in our account, honest!"

    So, I suspect that a fellow director would not be happy to see his/her fellow director jump ship and either retaining a shareholding if things are good or stable, or jumping ship at all if the ship is slowly sinking.

    @OP; I presume that you're just informing yourself before discussing it with your fellow director/shareholder. If not, you're likely to face conflict (if you want to resign unilaterally, then I'd imagine that you already know they'd not be happy with this) and it could get messy. Negotiating a friendly parting of the ways is always the preferred option and thankfully ending a business relationship is a good bit easier and fairer than a marital one, in Ireland.


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    #11
    thecommander
    Registered Users Posts: 2,537 ✭✭✭thecommander


    barneystinson wrote: »
    My point about the shareholding was that it is not simply a matter of resigning the directorship and walking away - the other guy is hardly likely to be happy to continue with someone else owning 40% of his business, and that's an issue that'll need to be addressed.

    He can continue to own the 40%, or the other shareholder(s) can make an offer to buy them. Can't see how this is a problem for OP.


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    #12
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    thecommander wrote: »
    He can continue to own the 40%, or the other shareholder(s) can make an offer to buy them. Can't see how this is a problem for OP.

    As a minority shareholder, realising the value of that shareholding if indeed it has a value at the time when he resigns as director, absolutely is a problem. Once he's no longer a director he has no say in the day to day conduct of the business, and it could very easily be the case for example that the goodwill which he owns 40% of in that company, could very well end up in a different company in which he holds no interest, without proper consideration flowing into his company.


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    #13
    Peterdalkey
    Closed Accounts Posts: 2,091 ✭✭✭Peterdalkey


    barneystinson wrote: »
    As a minority shareholder, realising the value of that shareholding if indeed it has a value at the time when he resigns as director, absolutely is a problem. Once he's no longer a director he has no say in the day to day conduct of the business, and it could very easily be the case for example that the goodwill which he owns 40% of in that company, could very well end up in a different company in which he holds no interest, without proper consideration flowing into his company.

    and oppression of a minority shareholder is a very dangerous place to be in!!!


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