Director of company/shareholders

[che_don_john]

You'd be better off being a shareholder rather than a director if necessary. A private company only needs one director but, as a director, you have a set of regulatory & legal responsibilties. So I'd be very clear about why your friend feels it's appropriate for you to be a director and steer well clear unless there's a very good reason.

Seconded. I invested some money into my best friend's first start-up, partly because he'd done a lot for me over the years and also because I was very confident he'd do well at it (which I had to be, as I'm rather risk-averse). I was in my mid-20s at the time but I was wise enough to listen to advice, which was to stick as a shareholder and avoid the responsibilities. I didn't really see it as 'going into business' with my friend - more just investing money to help him out and make a bit back, which I did well from when he sold it and went to start a new business abroad.

I've known and met a lot of people who went into business as friends and it worked well, but the cautions in this thread are for good reason: such ventures can ruin friendships. I guess it depends how much you value that friendship, how durable it is and how much you are prepared to take a risk! But then, business is fundamentally about taking risks, anyway.

 

[dickie davies]

Thanks for the advice so far everyone.

I'll still be doing my full time work, so it's not like mortgage, bills etc depends on it, more of a 'let see where this goes, type of thing'.

But like you say, I have this nagging feeling that he's after cheap help. In which case, I'll take everyone else's advice and shit on his lawn.

FFS, have you not read everything correctly, you're shitting on his doorstep

And seriously, take PB's advice and ask for shares in the company rather than being a Director

 

[Skip Donoghue]

Becoming a Director of a ltd company has no positives or benefits to it if you have no say in how the business will be run etc

You say you will be paid on profit share, which is great if there is profit to share in my experience any profit made ends up being put back in the business, (or used to pay dividends) even though it might say on paper the business made x amount of profit You usually find that isn't the case with regards to cash in the bank

Also as soon as you register to be a director you will be responsible for filling a tax return each year, which depending on how savy you are with these things may involve employing an accountant

Then if the business needs to borrow any money from the bank they will only lend if you sign a directors guarantee and they usually ask for all the directors to sign this no matter how minor your role in the business is, if the business fails to pay the loan or goes bust the bank will then have the right to chase you and your fellow directors for the full amount plus interest and they don't divide the amount between directors if you borrow £20k they will come after each director for the £20k and if they can't get it they will ask for a charge on your home if you own one and won't release that charge until the dept is paid and if you move house they will be there to take their £20k out of any profit you may get from the sale basically you can't move home as they won't transfer a charge on a property

The big question for me is why you are being asked to be a Director?
Is your mate disqualified from being a director?