A founder and 40% shareholder in a profitable recruitment company was dismissed as a director by two fellow directors and shareholders and was asked to sign a settlement agreement relating to his employment and leave the office with immediate effect. There was no written employment contract or shareholder agreement. He was offered a severance package in relation to his employment, but there was no mention of addressing his position as a shareholder.
As the client had been removed from a business he founded, we advised he had a good claim for an order that the remaining shareholders be ordered to buy his shares at a fair value. This was a classic “quasi partnership” shareholder claim, where the client had a legitimate expectation to continue to be involved in the business as a director / shareholder.
After early settlement discussions failed, legal proceedings in the form of an unfair prejudice petition were issued under the Companies Act 2006. The Court ordered a jointly instructed accountant to value the business and shortly after the valuation was obtained, the case was settled for a figure of £600,000, including recovery of all legal costs.
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