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This is an enquiry really for my brothers comany
He holds 75% shares (recently injected money into the business and revaluation give him 75%)
He and Mother are directors, Mother is Chairman
2nd brother, until recently an employee, took out a loan,circa 120K, in his own name, but managed to get the company to pay the 1st instalment. It was then discovered and stopped. He is no longer an employee as the company cannot afford either his salary, or his expenses, generally approved by the Chairmam. This is not the first time funds have been misappropriated, but it has been smoothed over in the pas by the chairman. Now with the change in shareholding, it would appear she does not understand she can neither 'smooth it over' or indeed, undertstand that the company cannot afford him or his behavior or in deed condone his behavior.
He has no money, other than that privately accepted from his mother (mainly due to gambling debts)
Does the company have grounds for legal action?
The Chairman whishes him to be re-instated. Can this be prevented?
How can the company remove the Chairman?
All advise will be welcome.
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1. Written by PaulWakefield1, on 08-06-2009 15:41
The short answer is as the owner of a majority of the shares in the Company your brother can determine which individuals should be appointed to the Board and indeed, removed from the Board.
As ever though the devil is in the detail and you would need to take care as to how changes were achieved and that they were not done in a way that leads the family into litigation. For instance, mother may allege that she has a legitimate expectation to be a director and that to remove her is unfairly prejudicial to her interests as a member (assuming she is a member of the Company also). Really your brother needs advice from someone with whom he can discuss the full picture.
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