Directors sold my share in a business.

[Steve Fryar]

My ex-wife and I invested money in a business of which she was a director.Both our names were on the loan from the bank.I have just found out that she and her fellow directors "sold my share" in April.The bank loan has not been paid off.I have received no payment.I have signed nothing.
The business has now gone into liquidation.I do have a lawyer but I just want a heads up on what could happen and how this could affect me.
Any help would be nice.
Thanks

[DavidG]

You need proper legal advice. Consult a solicitor.

[glenn k]

Steve are you saying they sold shares that belonged to you personally or you and your wife? Directors can do what they want most of the time. Like Oz Minerals selling most of the company to the Chinese for stuff all then getting new jobs with them. Rather than having a capital raising and keeping it going. Share holders had a choice agree with them or the company goes into recievership.
I don't know much about law at all; but it seems to me it benifits crooks and parasites.

[Sturdee]

"sold my share"

That depends on the name on the share certificate that was issued on purchasing shares.

If it was in your wife's name than they were correct in selling them. If they were in joint name it depends on the Memorandum or Articles of the Company if only one signatory is required to sell the shares.

However if it was in your name only they were incorrect.

As she was a director of the company I think the shares would have been in her name notwithstanding that you took out a joint loan to pay for it and if that is the case you will have to pay up to the bank.

I hope you took legal advice at the time of the transaction, if so you may have a case against your solicitor, if not you're unlucky.

Peter.

[johnc]

You had better hope you are not a director, if you are then you could be liable for certain debts of the company. As a shareholder you have certain rights but one would assume there is no money and not much point wandering down that path. You will be liable I suspect for the loan and we are talking about the entire loan not just your half.

Get what ever paperwork you have together and go and see a solicitor, that and an ASIC search should get you started and from that you need to work out what to do next.

At the moment you are probably nose deep in some smelly brown stuff and you need someone who actually knows what they are doing to get yourself to higher ground.

[Chesand]

It might be a good idea to find a solicitor experienced in commercial law rather than a local GP solicitor.

[Steve Fryar]

the loan for the share was put into a Trust.Our Trust bought it.I have spoken to my lawyer.My ex as a director is in very deep....bother.

[Sturdee]

the loan for the share was put into a Trust.Our Trust bought it.I have spoken to my lawyer.My ex as a director is in very deep....bother.

That may be so, but it still depends on the name of the owner as described on the share certificate. Normally companies require a director to hold some shares, especially private companies. Thus it may well be that the shares were actually in her name.

If that is the case the company could easily approve the transfer of her sale to others and the company is okay as it is a separate legal identity from the directors and shareholders.

So your problem seems to be with your ex wife, and your remedy is to sue her for any loss in the courts. Depending on her financial and family circumstances you may be better of to take your loss now rather than aggrevate the situation, especially if she has no major assets and has care of any children.

Sometimes cutting your losses now is better than throwing away good money chasing after bad. BTW that is something that is not normally advised by solicitors (because they won't earn fees) but is common sense.

In my previous life I saw many people that ignored that principle and small losses became very large because of legal fees. I personally know where one of my clients spend $ 150K just to get satisfaction over a debt of $ 40K with his estranged daughter. Now he could afford that but I'm sure that you wouldn't want to get on such a perilous journey through the legal system.

Peter.

[rrobor]

A husband is responsible for debts incurred by his wife or children who are under legal age. You have a complex problem here and it would be easy for your X wife to manipulate things for you to become a scapegoat. I think you need legal advice and you need it fast.

[Sturdee]

the loan for the share was put into a Trust.Our Trust bought it.

Another aspect to consider is the position of the Trust. You say that you both borrowed the money from the bank and that the trust bought the shares. Hence you both made a loan to the Trust which again is a different legal identity than both you and her as a director or shareholder and the company invested in.

Also the trust can only act through its trustees. Who are the trustees of this trust? If it is a company then you have directors which are probably the two of you. Or is it both of you as individuals. In either case I presume it is your ex and you who can control the trust. But if you're not in agreement what then ? Does the trust deed provide for such a situation ? or if it was a trustee company do the Articles provide an answer? If not again you are in deep problems.


If you can overcome all these problems then the trustee could claim against your ex if the shares isue and trust hadn't been dealt with in your divorce settlement.

Peter.

[johnc]

With a marital separation all assets go into the one pot and are divided up, which ever way you look at it what has happened is unlikely to effect the outcome at all. I'd forget about pedantics over share or unit transfers and get on with the financial part of the split with the ex. Sturdee is on the money, you are possibly heading down the path of blowing money on legal fees with little result likely to come of it. Get on with the divorce and don't stuff around with meaningless (financial) side issues.