5 ms·

Just be careful. A company and its board isn't a person - it's a legal entity. The company exists solely to make profit. That's it. And, the company will do eve

by ap22213 10y ago

Just be careful. A company and its board isn't a person - it's a legal entity. The company exists solely to make profit. That's it. And, the company will do everything in its legal power to do so. It doesn't matter what the intent of the founders were, nor how nice your boss or even the current owners are. They are not the company. Plus, I've seen way too many nice people turn into 'dicks' when it came down to money. This is the primary reason why it's a bad idea to go into business with friends or relatives.

vinceguidry 10y ago
I'd argue that the primary reason you don't go into business with friends or relatives because 99% of the time, they're not looking to do any real work or take on any real risk. Hire friends and relatives after the business is de-risked, not before.
bjelkeman-again 10y ago
Which is one of the reasons my last effort is a not for profit. All open source.
john_other_john 10y ago
Indeed. Anyone forming a company in England & Wales, also, might benefit from a chat with someone with long experience as a company director, or professional secretary, or even better a insolvency practitioner. If none are to hand, the staff at Companies House are unable to provide opinions, but I found they are ready to give well rounded observations which might make anyone think twice as to the value of relying on Companies Act, to protect their rights. At least the Act, alone. I've even enjoyed a very candid conversation at some length with the Registrar Of Companies, when the last major Act came into force, and she was incredibly helpful and illuminating, explaining the nuances of her statutory role and its offices. For guidance as to effect of Articles or Association, please do ask their Compliance office. Articles or Table A are the bylaws of a company, and many sharp operators will try to get Companies House to accept heavily modified articles, which contradict or attempt to restrict, statutory rights, roles or obligations. There was once a inactive registered company, names Silverstone blah blah management, about the time of a rumoured bid for control of the motor racing circuit. I pulled the Table A, and none to my surprise, almost every page of it was marked in the margin, alongside almost every paragraph, with a dot or a code, indicating Compliance was highly suspect of this document, as to its legality. But, as Compa ies House began to intone by reflex, I remember the information becoming a mantra when inquiring about almost anything, they are only a records office, not enforcers. The Registrar told me in addition, that that year sh had budget and allowance (I got the sense as if she felt it was a deliberately token allowance, arbitrarily set somehow and not under her budgetary power, to prosecute four directors each month, for technical breaches of the law. I had presented her office with a single director, for whom records tallied literally hundreds of summary offences. Larger but less scrupulous or less publicly reported companies, flout the law routinely, a trivial cost of doing business. Small fly by nights and sham "business partners" you may encounter, may roll right over you, in a instant. You might be a director and have majority equity in common shares, but another director may (quite unlawfully, but see further) de-register you as a director, call a company meeting, if one is even required, dilute you to nothing, seek shareholder approval for consolidating fraudulent actions, like divesting working capital via special dividend, and banks will almost in every single case, do as they are told if the right forms are provided. You will sure have recourse under the Act, and many summary (not tried but assessed on the facts by a judge) offenses are criminal and even punishable by imprisonment, but you would be lost without a proper management contract and ideally a law firm of repute contracted as Company Secretary and that contract specifying detailed additional procedures, even clerical checks and notifications help here, and ultimately if thus sort of thing happens, you are in real trouble with little real recourse and no immediate remedy. That's a mere taste of the fun which can be English Limited Companies! From memory, and it's long since I undertook any comparative study, only Sweden has laws which truly make a manager / managing director, responsible for their behaviour, under real penalty. Obviously, don't take my word for it, but I was seeking answer to just this: "So where can I risk turning my back one second, on a limited company I invest in?", and Sweden was the only jurisdiction which I felt satisfied me.
john_other_john 10y ago
oops, p.s. re my hypothetical of a director abusing powers: digital signatures and other online filing is of course potential safeguard to much abuse, but how many accountants are given those keys, to file reports, and how many accountants will typically be contracted to accept instruction solely from two simultaneous directors authorizing together? I has one bank account, where it's never been possible to get the bank to enforce the |two signatures required| rule that was supposed to be created on ticking the obvious, simple, standard feature, option box on their form! I personally think the way to go with UK entities, is to ensure all company compliance is handled by a larger or larger accountancy, and to begin the contract with a obligation to report "any notable alteration or variation from last known fully authorized intent as mandated by a order approved by the full board", with requirement to cease work until they have a appropriate (by scale, with "if in doubt, require every approval as if the contract is void" e.g, written responses from directors, not mere "informed by email at 03.42hrs Saturday". But that is expensive, of course. I can no longer neatly summarise, and I would be woefully out of date anyhow, how the principles of England & Wales company law, tend to uphold directors powers, almost to omnipotence. But the actual Companies Court, a branch of the High Courts, has teeth, if you apply to it. I never looked up if this was affected by recent legislation, and I cannot even recall the case docket any longer, but a 1973 case caused a director to be disqualified fro life from being involved in any company, solely on the evidence he relied on a accountant for advice during a decision. The principle the court upheld, was that a director gains his power under the act solely by competency to run a company, and solely under his or her own attestation and reconnaissance of such competence and in the event that a director explicitly sought even professional external advice, he was under a duty to the company to de minimus inform the board his positive reconnaissance of competency was I doubt; second that by failing to do so, he acted fraudulently in being without capacity to contract his obligations, which is a implied prerequisite of employment, which employment is a fact of appointment, thirdly that by relying on (even professional) advice, he caused the actual decision basis to become unknown to the board, as he could not be questioned at a later extraordinary meeting about the crisis the company faced, and therefore was liable to a criminal standard of deception. Name me one company director (count of fingers, I mean, if you can name any) whom you know do not rely on accountants to make financial decisions? As late as mid 2000s, I found no superseding case law to overrule this earlier precedent. But actual actions in Companies Court are rare. If you were in need of stopping a rogue director in their actions, or others in acting upon rogue instructions, you would wan to rush down to Applications Court, with as much evidence as you can grab, the pertinent law for reference, and a draft "without notice" application to obtain a order immediately, not waiting for anyone to reply, not wasting time politely writing cease & desist of other futile letters, and most likely unless you really are mistaken, you probably will get such a order to serve to stop rogue actions, with little or no delay. Such action is easily within the competence of most anyone here, to quickly prepare and present. You will find the Master Of Court, himself usually a senior judge, acting as a "doorman" or "bouncer" to prevent rubbish cases wasting the court's time. The Master is exactly who can be willing to get your application in good order, something I know no remotely affordable solicitor can do, within the time necessary, or at all. The experience in court is infinitely less troubling or intimidating, than the real worries you likely are facing, time of your visit. I found that court almost friendly, if friendly wasn't quite the effect they would ever go for... Judges are not unhelpful to law litigants in person, nor is anyone in the high courts, allowing you aren't silly or time wasting. I used to rant and rave about how much complete and utter disrespect for company law costs the UK, the lassezx faire of it all, providing none of the benefits the legislation might be hoped to provide a smaller business, in terms of a level base of behaviour etc. But that was before Companies House began citing legislation guidance notes, stating the purpose of the act was to promote business, a nebulous and at worst deceptive "mission statement" that the registrars' offices were not hiding behind so much, as using as a clear warning sign to the attentive, whenever they could. It's really worth getting a chat with anyone there able to still give their time and not attached to a ACD headset, but in real office, I wholeheartedly recommend inquiring beyond casual call center contact, if the moment offers itself to do so. FWIW, my most rewarding, productive, and of all my experiences the least every worried about money, collaboration in business, was with a family friend and henceforth, my friend, who sadly passed away unexpectedly and far too young, a decade ago. But my experience of "doing business with a friend" is almost unique, and we almost vied with one another competitively to be "by the book" and compliant with our duties to one another and company because of lousy earlier experiences. If anything, I think we raised that to the point of being a unnecessarily high cost, at least from our time. But it was absolutely a superb and indeed rare case of continuous trust building, which didn't supplant other necessary trust creating behaviour, nor detract or affect life negatively in any way. (e.g. bothering too much about being "above board" never caused one of us to think the other was "overdoing it much" for the wrong reasons. I can merely hope I'll have as good a experience again. But one huge positive legacy of all that exercise in transparency and proper discharge of our duties, really made me acutely aware of how I've just not met anyone since who I felt could meet my late partner's standards. I think we used our exchange of concerns as a means to inspect our business very usefully, but in the real world, you simply must have systems in place to fulfil this role, or you'll go crazy.

by ap22213 10y ago

vinceguidry 10y ago

I'd argue that the primary reason you don't go into business with friends or relatives because 99% of the time, they're not looking to do any real work or take on any real risk. Hire friends and relatives after the business is de-risked, not before.

bjelkeman-again 10y ago

Which is one of the reasons my last effort is a not for profit. All open source.

john_other_john 10y ago

Indeed. Anyone forming a company in England & Wales, also, might benefit from a chat with someone with long experience as a company director, or professional secretary, or even better a insolvency practitioner. If none are to hand, the staff at Companies House are unable to provide opinions, but I found they are ready to give well rounded observations which might make anyone think twice as to the value of relying on Companies Act, to protect their rights. At least the Act, alone. I've even enjoyed a very candid conversation at some length with the Registrar Of Companies, when the last major Act came into force, and she was incredibly helpful and illuminating, explaining the nuances of her statutory role and its offices. For guidance as to effect of Articles or Association, please do ask their Compliance office. Articles or Table A are the bylaws of a company, and many sharp operators will try to get Companies House to accept heavily modified articles, which contradict or attempt to restrict, statutory rights, roles or obligations. There was once a inactive registered company, names Silverstone blah blah management, about the time of a rumoured bid for control of the motor racing circuit. I pulled the Table A, and none to my surprise, almost every page of it was marked in the margin, alongside almost every paragraph, with a dot or a code, indicating Compliance was highly suspect of this document, as to its legality. But, as Compa ies House began to intone by reflex, I remember the information becoming a mantra when inquiring about almost anything, they are only a records office, not enforcers. The Registrar told me in addition, that that year sh had budget and allowance (I got the sense as if she felt it was a deliberately token allowance, arbitrarily set somehow and not under her budgetary power, to prosecute four directors each month, for technical breaches of the law. I had presented her office with a single director, for whom records tallied literally hundreds of summary offences. Larger but less scrupulous or less publicly reported companies, flout the law routinely, a trivial cost of doing business. Small fly by nights and sham "business partners" you may encounter, may roll right over you, in a instant. You might be a director and have majority equity in common shares, but another director may (quite unlawfully, but see further) de-register you as a director, call a company meeting, if one is even required, dilute you to nothing, seek shareholder approval for consolidating fraudulent actions, like divesting working capital via special dividend, and banks will almost in every single case, do as they are told if the right forms are provided. You will sure have recourse under the Act, and many summary (not tried but assessed on the facts by a judge) offenses are criminal and even punishable by imprisonment, but you would be lost without a proper management contract and ideally a law firm of repute contracted as Company Secretary and that contract specifying detailed additional procedures, even clerical checks and notifications help here, and ultimately if thus sort of thing happens, you are in real trouble with little real recourse and no immediate remedy. That's a mere taste of the fun which can be English Limited Companies! From memory, and it's long since I undertook any comparative study, only Sweden has laws which truly make a manager / managing director, responsible for their behaviour, under real penalty. Obviously, don't take my word for it, but I was seeking answer to just this: "So where can I risk turning my back one second, on a limited company I invest in?", and Sweden was the only jurisdiction which I felt satisfied me.

john_other_john 10y ago

oops, p.s. re my hypothetical of a director abusing powers: digital signatures and other online filing is of course potential safeguard to much abuse, but how many accountants are given those keys, to file reports, and how many accountants will typically be contracted to accept instruction solely from two simultaneous directors authorizing together? I has one bank account, where it's never been possible to get the bank to enforce the |two signatures required| rule that was supposed to be created on ticking the obvious, simple, standard feature, option box on their form! I personally think the way to go with UK entities, is to ensure all company compliance is handled by a larger or larger accountancy, and to begin the contract with a obligation to report "any notable alteration or variation from last known fully authorized intent as mandated by a order approved by the full board", with requirement to cease work until they have a appropriate (by scale, with "if in doubt, require every approval as if the contract is void" e.g, written responses from directors, not mere "informed by email at 03.42hrs Saturday". But that is expensive, of course. I can no longer neatly summarise, and I would be woefully out of date anyhow, how the principles of England & Wales company law, tend to uphold directors powers, almost to omnipotence. But the actual Companies Court, a branch of the High Courts, has teeth, if you apply to it. I never looked up if this was affected by recent legislation, and I cannot even recall the case docket any longer, but a 1973 case caused a director to be disqualified fro life from being involved in any company, solely on the evidence he relied on a accountant for advice during a decision. The principle the court upheld, was that a director gains his power under the act solely by competency to run a company, and solely under his or her own attestation and reconnaissance of such competence and in the event that a director explicitly sought even professional external advice, he was under a duty to the company to de minimus inform the board his positive reconnaissance of competency was I doubt; second that by failing to do so, he acted fraudulently in being without capacity to contract his obligations, which is a implied prerequisite of employment, which employment is a fact of appointment, thirdly that by relying on (even professional) advice, he caused the actual decision basis to become unknown to the board, as he could not be questioned at a later extraordinary meeting about the crisis the company faced, and therefore was liable to a criminal standard of deception. Name me one company director (count of fingers, I mean, if you can name any) whom you know do not rely on accountants to make financial decisions? As late as mid 2000s, I found no superseding case law to overrule this earlier precedent. But actual actions in Companies Court are rare. If you were in need of stopping a rogue director in their actions, or others in acting upon rogue instructions, you would wan to rush down to Applications Court, with as much evidence as you can grab, the pertinent law for reference, and a draft "without notice" application to obtain a order immediately, not waiting for anyone to reply, not wasting time politely writing cease & desist of other futile letters, and most likely unless you really are mistaken, you probably will get such a order to serve to stop rogue actions, with little or no delay. Such action is easily within the competence of most anyone here, to quickly prepare and present. You will find the Master Of Court, himself usually a senior judge, acting as a "doorman" or "bouncer" to prevent rubbish cases wasting the court's time. The Master is exactly who can be willing to get your application in good order, something I know no remotely affordable solicitor can do, within the time necessary, or at all. The experience in court is infinitely less troubling or intimidating, than the real worries you likely are facing, time of your visit. I found that court almost friendly, if friendly wasn't quite the effect they would ever go for... Judges are not unhelpful to law litigants in person, nor is anyone in the high courts, allowing you aren't silly or time wasting. I used to rant and rave about how much complete and utter disrespect for company law costs the UK, the lassezx faire of it all, providing none of the benefits the legislation might be hoped to provide a smaller business, in terms of a level base of behaviour etc. But that was before Companies House began citing legislation guidance notes, stating the purpose of the act was to promote business, a nebulous and at worst deceptive "mission statement" that the registrars' offices were not hiding behind so much, as using as a clear warning sign to the attentive, whenever they could. It's really worth getting a chat with anyone there able to still give their time and not attached to a ACD headset, but in real office, I wholeheartedly recommend inquiring beyond casual call center contact, if the moment offers itself to do so. FWIW, my most rewarding, productive, and of all my experiences the least every worried about money, collaboration in business, was with a family friend and henceforth, my friend, who sadly passed away unexpectedly and far too young, a decade ago. But my experience of "doing business with a friend" is almost unique, and we almost vied with one another competitively to be "by the book" and compliant with our duties to one another and company because of lousy earlier experiences. If anything, I think we raised that to the point of being a unnecessarily high cost, at least from our time. But it was absolutely a superb and indeed rare case of continuous trust building, which didn't supplant other necessary trust creating behaviour, nor detract or affect life negatively in any way. (e.g. bothering too much about being "above board" never caused one of us to think the other was "overdoing it much" for the wrong reasons. I can merely hope I'll have as good a experience again. But one huge positive legacy of all that exercise in transparency and proper discharge of our duties, really made me acutely aware of how I've just not met anyone since who I felt could meet my late partner's standards. I think we used our exchange of concerns as a means to inspect our business very usefully, but in the real world, you simply must have systems in place to fulfil this role, or you'll go crazy.