Q: I am one of two directors of a limited company and am experiencing problems with the other director. She is not working and is becoming obstructive in a way that is starting to harm the business. How should I approach the situation and what are my options?
Oct 11 2006
Answered by: Peter Done Ask a question
It’s worth knowing where you stand legally especially if you have an effective shareholders’ agreement and service contracts. These documents should give you guidance if there has been a fundamental breakdown in your relationship.
Assuming you don’t have anything more than Articles of Association (which all companies have) then a more pragmatic approach will work better. If you have equal shareholdings and you are at loggerheads then consider one of the following:
• How much is the business dependent on her?
• What impact will your parting ways have on staff and customers?
If she is not working, that will almost certainly be demoralising staff and her difficult behaviour could jeopardise customer relationships and therefore the business.
Ask her what she wants and try to understand why she is being difficult. Personal issues might mean she’d be happy to sell out to you at a reasonable price, assuming you are happy and able to run the business on your own. If she is unreasonable and won’t discuss things there are other more dramatic options of last resort, which you should talk to a solicitor about.
What ever happens with this case if you enter a partnership again always consider the future and “start with divorce and work back!”
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