Been offered Directorship / Given a share...advice needed please!

GinG

GinG

GinG

Soldato
Joined
22 Jul 2006
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Evening all,

Some of you may (or may not!) remember various threads of not being happy, looking at other way of making a living etc etc well cut a long story short after a heart to heart with the MD he has offered me a position to be a Sales Director and possibly offer me 5% share into the company.

Now being only 27, having not had much experience in anything other than being an employee I would like to know what I am getting myself into?!

The company itself is not financially strong at the moment, however there is a little glimpse of hope and if I can pull off a few new accounts I am working on things could definitely be looking on the up. The company at present pretty much breaks even, but this is because the MD pretty much likes investing the cash back into the buildings and site (about 9.5 acres), and the site is actually mortgaged and not rented.

Speaking with the accountant (outside company) he says since he has taken over the account (2.5 years) the company is looking much better and just needs that little something to just nudge it over to a healthy profit turning company.

The company is Ltd, but does have debts i.e. mortgage, finance for machinery, overdraft and runs on invoice discounting.

Basically as a Director/Shareholder of a Ltd company what role do I take, what responsibilities and if I take the roll am I putting anything I own personally on the line? i.e. house, cars etc?

I am earning a healthy wage at the moment but still around £5-6k short of the potential in my roll (Sales Manager) in the industry, I would like to think I could get a £10-£15k raise taking on the new roll, however not quite sure if I would be putting the company in a little difficulty at first.

Basically I think if I have no personal ties I would give it a damn good shot, but I don't want to put anything at risk for a company I have had no say over how it spends its money and money management etc. Company has been going for 25 years+ and has a very good reputation within the industry. We are in a sticky wicket because a Supermarket screwed us and as such lost around £2 million worth of turnover but I am working at that now to rectify.

Any help and guidance would be very much appreciated!

Sorry for the rambling and wall of text!!!
 
GinG said:
Basically as a Director/Shareholder of a Ltd company what role do I take, what responsibilities and if I take the roll am I putting anything I own personally on the line? i.e. house, cars etc?
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This would be something you need to talk to the MD about ie whether he wants you to invest into the company via your assets.

But as a director myself, i didnt have to put any of my assets on the line so to speak. My duties are to make sure the company i work for is running smoothly and efficiently, im also in charge of the paperwokr which ranges from buying in equipment to payroll. But my company is a just a small outfit, there is me plus my boss and 3 other people that work in the company.
 
I do not need to put any assets or any any financial contribution into the company he is effectively gifting me the company...however he is speaking to the Accountant to sort this so no tax implications etc.

Is it a matter of making sure I cover my own back, make sure everything is documented etc, if eventually the turd hits the fan make sure I have done everything to the best of my ability??
 
Being a Director of a Limited company, by which I mean a Registered Director not just someone who has Director on his business card, comes with obligations that you really need to be aware of. It won't put your house or family at risk from a cash standpoint unless you put equity into the company, but it does expose you to obligations. Go here and do some research: http://www.companieshouse.gov.uk

Big topic and I could go on for pages but you need to take professional advice in my opinion if you are having to come to a website for advice, which is no problem I hasten to add but highlights you have some guidance needs.
 
So he's going to give you 5% of the company for no cost to yourself?

What benefit will you see from share ownership, dividend?

Our company is employee owned, we pay a reduced rate for the shares and get 3 dividends per year,
 
Housey said:
Being a Director of a Limited company, by which I mean a Registered Director not just someone who has Director on his business card, comes with obligations that you really need to be aware of. It won't put your house or family at risk from a cash standpoint unless you put equity into the company, but it does expose you to obligations. Go here and do some research: http://www.companieshouse.gov.uk

Big topic and I could go on for pages but you need to take professional advice in my opinion if you are having to come to a website for advice, which is no problem I hasten to add but highlights you have some guidance needs.
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Appreciate this Housey, I will be a registered director and not just a title. Is there any free advice available out there? I really need guidance for my actual role.

I did speak to the accountant but he couldn't say too much to sway me either way and just gave me a very broad view on things...came out no further forward!
 
Firestar_3x said:
So he's going to give you 5% of the company for no cost to yourself?

What benefit will you see from share ownership, dividend?

Our company is employee owned, we pay a reduced rate for the shares and get 3 dividends per year,
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Yes at no cost, it will be a dividend but like I say the company is pretty much breaking even so no dividend to take just yet! But I will own 5% of the company, which I believe has a net worth of just over £1million.
 
GinG said:
Yes at no cost, it will be a dividend but like I say the company is pretty much breaking even so no dividend to take just yet! But I will own 5% of the company, which I believe has a net worth of just over £1million.
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Sounds ok, it's a great incentive to work hard!

The main thing to check is your liability should the worst happen, since they need to register your name with CH as a director see if you need to sign anything, read what you sign very carefully!
 
Firestar_3x said:
Sounds ok, it's a great incentive to work hard!

The main thing to check is your liability should the worst happen, since they need to register your name with CH as a director see if you need to sign anything, read what you sign very carefully!
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Yeah basically this is his thoughts, he is 63 or whatever and does not have as much interest in the company, he thinks this is a great way to make me more interested in moving the company forward.

There is a guy who I get on very well with who was in a similar position for another similar company maybe 15 years or so ago. Cut a long story short now a millionaire and a company director of a multi global company (through acquisitions). I like to dream!!

Basically I guess to make things clear I just need to know top and bottom of it what I am liable for?? But as a Ltd company I guess personally I shouldn't be affected?
 
If he's offering you a better salary to go along with it, then by all means take it. But the 5% is not worth very much if it traps you in a job where the salary does not meet the responsibility.
 
Thompson_NCL said:
If he's offering you a better salary to go along with it, then by all means take it. But the 5% is not worth very much if it traps you in a job where the salary does not meet the responsibility.
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especially if there's no dividends and I'm guessing the company ain't traded on the stock market either

5% of nothing :P but traps you in your job
 
GinG said:
Appreciate this Housey, I will be a registered director and not just a title. Is there any free advice available out there? I really need guidance for my actual role.

I did speak to the accountant but he couldn't say too much to sway me either way and just gave me a very broad view on things...came out no further forward!
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If you want to pick my brains feel free to contact me via trust and I will give you some pointers of what you need to focus on via telephone.
 
Since when does owning shares in a company trap you into the job? He would still be able to leave within the terms of his contract. Agreed that non-traded shares with no dividends is pretty much worth nothing (well, no dividends would make the shares worth barely anything even if they were traded), you would only see the money if you were able to sell them (which for a ltd company probably requires permission from other shareholders) or if the company ceases, and then only if all liabilities are met.

This page gives a brief overview of some responsibilities as a director: https://www.gov.uk/running-a-limited-company/directors-responsibilities
 
Phantom Shadow said:
Since when does owning shares in a company trap you into the job?
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Well I suppose it depends on the terms of the deal. If the MD is literally giving him 5% up front, then I'd snap his hand off. But I'd be very surprised to discover that was the case, more likely it's going to be something like 5% in 3 years. In the meanwhile he's running himself into the ground working long days for the same/similar salary he's on now in the vain hope he can make some money off his 5%. Which as you say, might very well be worthless if no one wants to buy it.

That isn't me suggesting the MD is being sly, I just think he's going to want some guarantees his 'investment' is not going to sod off in six months.
 
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