Dividing the risks between director and shareholder?

[webberg]

This is highly unusual and in terms of risk and reward makes no sense.

You would be better off just taking a loan from your mentor and running your own company.

[LondonManc]

Hi,

I’m planning to open an LTD company. An old mentor of mine, who is very experienced, wants to have 100% shares of the company initially. It means he wants to make all the decisions in the first year. Then his share will go down 10% each year (transferring to me) until it reaches 50% in the 5th year. The reason for this dominance is that he is very experienced while I’m not and he wants to show me the way a company should work.

I will then receive a fixed salary monthly. My salary comes from my mentor’s account: he will pay for me by his own money.

My thinking: what if after some months my mentor sees no future in the company and decides to run away, how do I survive? Should I ask him to deposit a 6-month or 1-year amount of my salary into the company’s account, then I’ll withdrawn from it every month?

In that case, I’ll be on a very safe side: receiving monthly salary for sure although I may not find any contract. And my mentors runs the risk of losing all shares if I screw up.

In short, my mentor has money and skills but he’s very old. I have the ability to execute but no money. I also have a family to take care of.

My mentor is also very persistent in having a lot of power over the company.

What should be the optimum option to divide the risks in my case?

Thanks a lot !

What do you need the mentor for? What's his role (other than shafting you)?

[simes]

Don't understand this one at all.

What is the purpose of the LtdCo if not for contracting? Are you selling a product or some other sort of service based on multiple clients whereby he is, or has to be the face of the company?

Otherwise, if you're contracting, your accountant will show you how to run the company. And hopefully, s/he won't run away. Or die!

[northernladuk]

Don't understand this one at all.

I think you ought to put this disclaimer at the start of every post you make... Or maybe in your sig so the reader can asses the quality of your post

[northernladyuk]

I think

That would be a first.

[WordIsBond]

Don't understand this one at all.

I think you ought to put this disclaimer at the start of every post you make... Or maybe in your sig so the reader can asses the quality of your post

Ahem. I don't understand what the OP is on about either, and I hope you don't, either. Because based on what he said I'll be amazed if anyone understands....

[northernladuk]

Looks like we'll never know. Another one post wonder sadly.

[zonkkk]

Looks like we'll never know. Another one post wonder sadly.

Unless his mentor changes his mind, and decides to let him come back on the forum.

[l35kee]

Hi,

I’m planning to open an LTD company. An old mentor of mine, who is very experienced, wants to have 100% shares of the company initially. It means he wants to make all the decisions in the first year. Then his share will go down 10% each year (transferring to me) until it reaches 50% in the 5th year. The reason for this dominance is that he is very experienced while I’m not and he wants to show me the way a company should work.

This mentor is not your friend. In fact I am assuming he actually doesn't like you at all, and is taking advantage of you totally and completely.

There is no risk to him. He cannot lose his shares. He cannot lose his money. He only stands to gain, while you aren't even standing.

Get away from him.

[NotAllThere]

Looks like we'll never know. Another one post wonder sadly.

TBH, it was on the cards from the start.