Any advice please....

Discussion in 'Growing and Managing a Business' started by jason555, Jul 28, 2013.

  1. jason555

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    Jul 28, 2013
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    Will try to keep brief

    I work for a Ltd company that has been going since 1974 that has 2 branches and has shares divided 50/50 between 2 families. Myself and my father run one branch which makes all the money, his business partner and son run another branch which doesn't make any money. We have 25% shares each.

    I cannot go into the frustrations,resentment and ill feeling, but I still put in about 80hrs pw my father similar and the other two are lets just say taking liberties with effort, time keeping, days off and other interests. Whatever I do I end up with the same wage and dividend as the others, I continue to put the effort in as I have a young family / mortgage etc. and want to do the best I can.

    The 'other' family' will not split the company to allow 'us' to buy our branch and will not sell the whole business.

    My father has sympathized with my frustrations over the last few years but I think he feels a sense of loyalty to his 'partner' after starting together from nothing all those years back.

    The other family have refused to sit down with an arbitrator so I just don't know which way to go other than carry on, my question is this -

    I have made a good supply contact for goods we buy in to re sell, if I was to set up my own company buy the goods myself and then sell on to 'the company' at profit - would I be doing anything illegal (conflict of interests etc)? I appreciate I have to keep all relevant records for tax and become vat registered. I was thinking of setting up as a sole trader with a business name to mask anything obvious to the others, and 'the company' would still be making money.

    My father agrees with this but is there anything wrong in it given the situation?

    #1 jason555, Jul 28, 2013
    Last edited: Jul 28, 2013
  2. AnushaJain

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    Apr 7, 2013
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    I think this will be the better option fo you and your family,atleast you will give your entire time towards your profit and you will be free from frustration too..
  3. ArcSine

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    Jun 2, 2010
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    Very generally, the two things you need your proposed action to not run afoul of are
    1. The provisions explicitly agreed to in the partnership agreement; and
    2. The partnership laws of the particular jurisdiction(s) in which you operate.
    In that latter category one usually finds various rules which govern issues or questions for which a partnership agreement is silent or ambiguous. One in particular is noteworthy (at least in the U.S.); whether or not explicitly stated in the partnership agreement, partners are generally charged by law with a fiduciary duty to one another and to the partnership itself. One state in particular defines fiduciary duty as a "duty of loyalty and a duty of care".

    While my frame of reference is U.S.-centric, I'd imagine a similar structure to exist in partnership laws elsewhere.

    Of course, since us non-attorneys should leave the lawyerin' to the lawyers, a definitive answer you can really hang your hat on comes only after you've had one vet your situation and all its underlying details.

    Also note that all the foregoing cuts both ways. Check your partnership agreement carefully; it's possible that the other family's inattention to the biz has triggered some agreement provision whereby you could exercise a buyout option, or something similar. In a well-drafted PA, explicit standards for the partners' performance (hours worked, new business brought in, or whatever metric is appropriate) are set forth, along with the allowable remedies in the event such standards aren't met. Such remedies frequently include a buyout option which may be exercised against the sub-performing partner.

    It might also be the case that the other family has already breached its fiduciary duty to you and to the company, if their "days off and other interests" are great enough. To make such a case, you'd probably need to have the specifics well-documented. The fact that they've refused to go in front of an arbitrator means they're at least on notice as to the issue, and if they continue to shirk their fiduciary duties, that'd work in your favor.

    Best of luck with it. I'd be extremely frustrated and irate in your shoes. But by taking care to proceed along the proper sequence of steps, you maximize your chance of a satisfying conclusion. Don't shoot yourself in the foot at this stage with a legal mis-step that gives the other family an effective counterpunch.
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  4. alicemenezes

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    Oct 18, 2012
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    It might be a conflict of interest but in the end it depends on what kind of legal agreement you'll have made.
  5. Priyanka Sharma

    Priyanka Sharma
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    Feb 4, 2013
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    better option consult with good lawyer

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