Company dissolving
1 minute read
Q. We are 2 co-founders and directors of a company. There is a valuation of 8M and we finished the seed round. However we cannot agree on how to move forward. We are considering dissolving the company. My co-founder has told me that if I decide to dissolve , he will agree , then re-incorporate without me. Is this legal? If yes, How do I prevent this from happening?
A. This will be down to the contracts between the directors, the company and the shareholders and the exact company structure and the voting rights of the shareholders. You should read the articles of association and your own contract in detail.
Normally a director is removed under the articles of association. If there's no way to do this then there's a procedure under the Companies Act where the shareholders can vote a director to be removed.
Dissolving the company and then re-forming it is not the usual mechanism. You will need a majority of directors to agree to dissolution; again this depends on exactly the company structure. If you are the only two directors then you will both need to agree to dissolution.
Given the amount of money involved, you definitely need a solicitor.
