Will i get dividends if i go silent from a director?

Discussion in 'Growing and Managing a Business' started by owen1985, Dec 5, 2014.

  1. owen1985

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    Dec 5, 2014
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    I am currently in a limited company with 2 other directors who all own 33% shares.

    We currently get 30k annual salary which is split between directors wage and shareholder dividends for tax efficiency.

    we currently work 4 days a week but was looking at dropping to 2 days and take 15K annual salary.

    I have just come out of a board meeting and been told this will not be possible for the business and i have to remain at 4 days a week or become a 'silent partner' and do no days. ( are these my only options?)

    In terms of becoming a silent partner, where do i stand in terms of shares and dividends.

    We are all really good friends and I am keen to keep it this way and want all three of us to feel a fair and honest agreement has been met so any advice would be most welcome.

    we are in agreement that i keep my 33 shares, and somewhere down the line if the company sells i will be entitled to 33%.

    However there is mixed view on how the salary/dividend structure would work.

    My thoughts are that the other two directors get paid a fair/market salary to for their day to day work in the business and in the future if there is any excess profit in the company, it gets split evenly between the shareholders.

    However, the other directors think that they will be entitled to take all the profit out of the company in inflated salaries (as directors salaries are decided by the board, of which they will have 66% voting rights)- leaving me with no dividend payouts and waiting many years for the possibility of the company selling.

    Is this a valid way for them to split future profits between themselves to prevent the remaining shareholder (me) getting a cut of any company profits?

    Any advice would be appreciated.

  2. golden-process

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    Dec 12, 2014
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    What's the source of this reasoning? Is it in your bylaws? In a contract? Is it in state law? That's where I'd start because often people are misinformed and say things they've heard when it's not the only option.

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