 Jeff
Smith and Alan Jones set up an advertising
agency in 1994. The two were originally
university friends and had worked
together in the industry for many
years. After two years of successful
trading, their accountant urged them
to register for VAT and set the business
up as a private limited company. The
two partners and friends both became
Directors and equal shareholders in
the company. Unfortunately, a
dispute developed between the two
Directors some years later. Jeff felt
that he was carrying the burden of
the work in the business. Alan felt
that Jeff’s new wife was meddling
in the business and should be told
to back off. Their dispute started
to damage the performance of the business
which was now turning over more than
£2million per year and employed
15 staff.
The two Directors
finally conceded that they could no
longer work together and approached
a solicitor for advice. Unfortunately,
they had failed to put in place a
shareholder agreement that would provide
an agreed legal framework for one
shareholder to exit without damaging
the business. This meant there was
no basis for agreement and the dispute
continued and then increased in its
bitterness.
Finally, after two
years of wrangling, the business collapsed
and all the staff were left without
a job. Jeff and Alan had worked for
over 10 years to build a successful
and profitable business only to see
it disappear because the correct legal
documents had never been prepared.
Call Barnes Marsland SME
Business today on 0845 270 2999 or
email business@barnesmarsland.co.uk
for a complimentary business legal
health check. You don’t know
when you might need us next.
Could this be YOU?
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