BukMiBoat Ltd is a web based boat share company.
There are 2 shareholders with 50 x£1 shares each who are also the directors of the company.
Andy :- 34yrs old - a technology wiz, married with a 6 month old baby son. In 2012 he built the web site and the back office processing. He started the business on his own in his house and without the protection of a limited company. It became far more successful than he had anticipated so far as site membership and use was concerned but it did not produce much revenue. The paperwork and office management was non-existent and he quickly found himself in somewhat of a mess. He realised he needed some office help and also investment to exploit interest from potential partner organisations. He decided to attend and do a pitch at a ‘meet the investor’ event held by his local techies networking club. There he met…..
Bill :- 58yrs old who recently took early retirement from a large engineering company in which he had worked his way up from the shop floor to a senior managerial role.
He had never been in business before but claims he knows how to run a business and was looking to invest in a new startup with high potential.
They agreed to form a new limited company with shares split 50/50 and both being the directors. Bill would give the company a loan of £50,000 to help fund some IT development assistance to Andy.
Bill agrees to be available for an indeterminate amount of time to advise on business and management and marketing. He pops into the office once a week at most.
The website is key to marketing and is registered in Andy’s own name.
They did to enter into a Shareholders Agreement and there is also no licence agreement in place for the Intellectual Property Rights.
They do not hold regular meetings nor minute the few they do have. This was contrary to what Andy had anticipated from disciplines he hoped that Bill would bring to the company.
The company rents an office with the rent guaranteed by the directors.
Bill begins to complain about the reduced time Andy seems to be spending in the office. Andy says he works same long hours but does more from his home office. He pleads the demands of fatherhood.
Bill accidentally finds out from some paperwork Andy had left in the office that Andy appears to be helping out an old friend in setting up a web business, that, whilst not in the boating sector, appears to offer a similar service for luxury classic cars. It seems from the emails he read that the software being used is the one at the heart of the BukMiBoat service. Bill suspects Andy may take shares in that company and, given the difficulties arising in their relationship, possibly may be planning to leave.
Andy complains that Bill has only paid £20,000 of the £50,000 into the company.
Bill says he is drip feeding because he wants to be sure it will be properly spent. This gives Andy problems in paying service suppliers and he begins to wonder whether Bill is having second thoughts.
Andy, who controls the company’s mail server, inadvertently sees an email Bill had sent to someone that seemed to be about him joining the company to provide the technology skills Andy has. Andy fears Bill is trying to get rid of him.
The business is doing reasonably well but there is disagreement over whether to partner with another company, in boating supplies, run by Henry, an old pal of Bill’s, which would make a lot of sense to enable it to expand. Andy wants to expand through their own efforts. He doesn’t trust Henry anyway because of his friendship with Bill.
The effect of these disagreements, especially the withholding of the rest of the promised investment, begins to take a toll on the company with its digital marketing efforts being reduced and revenue reducing fast.
One day Andy finds the lock to the office had been changed. Bill was in the office and told him to leave. He threatens him with violence and he leaves.
Andy finds that the company’s bank account is in overdraft as the £30,000 has still not been paid in. Both Andy and Bill are on personal guarantees to the bank and both have full mandates on the account although only Bill has online access. The bank are content with the overdraft which they have authorised but since Andy informed them of the dispute with Bill they have placed a form of freeze on the account refusing to authorise any payments out save on the authority of both directors.
Bill takes legal advice to the effect that he cannot bar Andy, as director, from the company’s premises (rented) nor can he refuse him access to management/financial information. Andy has received similar advice.
They agree to mediation.
NOW WATCH THE VIDEOS
(Note: The videos last 36:09mns in total. They have been heavily cut down in editing to just give a quick flavour of how and why shareholder mediation works).
Opening Session (06:24)
First Private Session with Andy (03:01)
First Private Session with Bill (12:00)
Second Private Session with Andy (05:29)
Second Private Session with Bill (04:05)
Final Session (05:38)