Money Has Been Taken Out From a Company Without My Agreement – What Can I Do About It?

Money can be removed from a company in lawful ways and that is most often the aim. Examples of lawful removal of monies includes paying for staff (PAYE); to third parties as expenses/purchases; payment of taxes; or as a distribution of profit (a dividend). Any company is governed and regulated by its articles of association. The relationship between an individual and a company is usually covered within a contract – for example, an employment contract; a Directors’ service agreement; or a loan agreement. Relationships between Shareholders are usually governed by a shareholder agreement – another type of contract. 

Although the above are the ways monies should be removed, it isn’t uncommon for a rogue Director or Shareholder to unlawfully remove monies including without agreement or proper resolutions being passed authorising that conduct. If you have discovered the removal of monies outside of any of the above, a departure from the norm and what had been happening, and/or coupled with a lack of transparency or change in personal behaviour these can be hallmarks of fault and/or wrongdoing. 

The most appropriate next steps on discovering monies having been removed will be very fact specific/dependent and will vary on a case by case basis. For example, if the amount is low and is not disputed, you may simply want to be clear with the other Directors and Shareholders on your process to properly authorise transactions in the future. Ensuring there are correct contracts in place, and perhaps altering the bank mandate to ensure two factor/two signatory approval might assist. It might be appropriate to amend, say, your expenses policy in the case of a Director, or to amend your Shareholders agreement in the case of Shareholders, to avoid the risk of a dispute over similar issues in the future.

If the amounts involved are more significant and have been removed in the context of other ‘red flags’ such as a Director or Shareholder departing the company, or a broader dispute, then more vigorous and urgent steps might be required to protect your position and the company’s position. We have acted in claims where it has been necessary to obtain an injunction to prevent further damage to a company, forcing rogue Directors and Shareholders to act in a certain way. This can be appropriate where delay might lead to prejudice to you as a Shareholder (an unfair prejudice petition), or to the company’s ability to function (a derivative claim).