Selling Assets: Legal Question

[Jalipa]

Hi All,

I hope this is the right venue for my question.

Is it legal for a company director to sell a primary asset to another company, of which that same person is also a director?

Background:
My wife started a company with a business partner “Fred” to build & run a website. Both are 50:50 shareholders. After two years and one quarrel too many, Fred abruptly resigned as Director leaving my wife as sole director and only person running the company. Fred remains a shareholder. He has made it plain that he will neither sell his holding nor take part in the running the company.

They had agreed* that my wife may either sell the assets (website) and wind up the company or that she continue. Before he resigned Fred approached an individual to buy the website for £10K. He strongly suggested that the site is sold to this individual and the money split.

It is also quite clear that when he resigned that he expected the whole edifice to fall apart without him.

Back to my question:
My wife wants to keep the website/business. She has improved its turnover since Fred’s departure and wants to expand the business.

She feels that since he resigned as director that he can no longer take an active part in business decisions – she would like sell the website to a new company owned by her out right (for £10K) and close down the existing company and pay Fred his half.

But we are worried about the legality of this. Especially as Fred is likely to be p****d off, if the website has not been sold to a third party.

So is this legal?

Thanks

J

*”Sell it, run it, do what you f**** want. I don’t care” would be a more accurate quote.

[bwglaw]

Specific advice needs to be obtained to ensure the accuracy of any facts and any rights/obligations associated to them. Even though Fred resigned as a Director, he appears to remain a shareholder and the company's articles and/or any shareholding agreement may have a clause related to the disposal of assets.

I can advise further but need to communicate with your wife directly to obtain the correct facts and will require further information about the company.