I am running a software products company. It is a private limited company with two directors - myself and my wife. Of late, we have decided to divorce. The company was incorporated in the year 2000 and purely out of love i included my wife as the other director and foolishly gave her exactly 50% stake as well. Money for incorporation has been paid by me the her share of the paid up capital is also paid by me. She had no source of income at that time to fund the company. She has no technical knowledge required even today. Only for three and half years (Dec 2006 to June 2010) out of the last twenty-three years, she was looking after the company in the sense of just giving the demo of the existing software and being the point of contact for the existing customers. She also acquired a few very small customers none of whom are exsting today. But all the while, I had to support her from the backend because I had taken up a job. When I took over the company operation back in 2010, all the big customers were lost and was left with just one employee (from about 10-12 people), revenues had gone down drastically. For the last about 5 years or so, she has been just taking care of compliances like filing GST, Professional Tax, TDS, etc. with absolutely no contributions towards the products, customer acquisition or customer support. She is a completely non-technical as far as our products are concerned. For again, purely out of love and my stupidity, I have always paid her exactly the same salary from the company as I was drawing. During this sour phase of our relationship: 1. She has withdrawn big chunks of money without consulting me, although probably it was payable to her. I came to know because the bank grew suspicious and called me to check if I had issued a cheque of Rs. 12.9 Lakh!! 2. She didn’t share the credentials to file compliances so our company has failed in some compliances 3. She has become very non-cooperative in regular operations of the company insisting that her permission be sought in everything. She has become a major bottle neck. Can I bring some kind of injunction against her non-cooperative actions? 4. What would happen if I completely withdraw myself from the business and let the company die? 5. What are my other options?
First answer received in 10 minutes.
Lawyers are available now to answer your questions.
Since your wife has 50 per cent share in the company and is un cooperative do not bring any fresh business into the company
2) form separate company for carrying on business
3) if there are less funds wife would not be able to withdraw funds from bank
4) best option is to go in for winding up of company
1) You can send a letter asking the reason for withdrawal of Rs.12.9 Lakh. If she did not give valid reason then you can file complaint against her as per Company Act and Industrial Dispute Act for making fraud in the Company.
2) That's good company has filed compliance against her.
3) If you have 50% share ratio than you can deny her suggestion whatsoever go against you and company.
4) Do Not withdraw as of now pass some resolution in the Annual General Meeting and appoint new Directors in the company who will run the company to be profitable in future and take whole control over company by increasing your stakes in the company. You have to act vey diplomatic while handling such thing.
5) Refer point 4.
Take your first step towards winding up your Business.
When the company winding up takes place firstly the debts, expenses and costs are paid away and distributed among the shareholders.
Once the Company is liquidated it is formally dissolved and the Company ceases to exists.
Winding up is the legal mechanism to shut down a company and cease all the activities that are carried on.
A Private Limited Company is an artificial judicial person and requires various compliance if the company fails to maintain these compliance there are fines and penalties or even disqualification of the Directors from further incorporating a Company. It is always a better to wind up a company.
Convene a board meeting with the Directors in which a resolution should be passed with a declaration by the directors that they have made an enquiry in the affairs of the Company and the company no debts or the Company will pay from the precedes of the assets sold in the voluntary wind up of the company.
A company can also be closed by filing an application with the ministry of corporate finances in about 3 to 6 months. This process can happen online entirely. The process for closing a company is fast and easy if done through a skilled consultant
1. If she has not given the right to deal with the account of the firm without the consent of you , then the said withdrawn of the amount will be considered as an offence of cheating and breach of trust
2. Yes, you can file a suit for Injunction before the court for restricting her from using the account without your consent
3. Since, she is not working for the benefit of the company , then you can dissolve/winding up the company either giving a notice for the same or after filing a suit before the court.
- As per law, if the misconduct of a partner is adversely affecting the business and their reputation, then the court will consider dissolving the firm in response to a suit filed by any other partner of the firm.
Dear client,
Shareholder Agreement: Review your company's shareholder agreement, if you have one. This document may outline the rights and responsibilities of each director and shareholder, and it could provide a basis for resolving disputes.
Divorce Proceedings: Since you're going through a divorce, the division of company assets and shares may be addressed as part of the divorce settlement. Your attorney can advise on how this may affect the business.
Non-Cooperative Director: If your wife is not fulfilling her duties as a director and this is causing harm to the company, your attorney can guide you on potential legal remedies or actions to address her non-cooperative behavior.
Company Closure: If you decide to withdraw from the business and let it dissolve, you should follow the legal procedures for winding up a company. Your attorney can help you navigate this process.
Buyout or Restructuring: Depending on the terms of your shareholder agreement and the divorce settlement, you may explore options such as a buyout or company restructuring to address ownership and control issues.
Mediation: Consider mediation or alternative dispute resolution methods to resolve the issues amicably, if possible.
Future Planning: For future business ventures, consider seeking legal advice on structuring the company, shareholding, and management to avoid similar issues.
You can approach court for immediate action and urgent injunctive reliefs in said matter
