Private Limited Co.
11 Jun 2012, 20:38
Mr. A & Mr. B are going to start a private ltd co. which will be in IT services. A holds 30 % and B - who is my friend holds 70% and both A&B will act as directors. Another 4 people including myself are pumping some money to B for initial investment. Mr. A does not aware of this understanding between 5 of us (B, Me & 3 others). Mr. B is saying there will be an MOU between 5 of us and he does not want this to disclose to Mr. A. Is this legallay OK? does this kind of MOU is valid? please advice. Thank you.
1 Reply
Private Companies cannot accept deposits from the general public. However, yours doesn’t seem to be a scenario where even this is happening. You seem to have an arrangement on the side with one of the founders without the knowledge of the other. Always a sound principle when founding a company - mutual mistrust.
Your best case scenario should things go belly up in the present set of circumstances would be you have a suit for recovery of the money loaned against B. Any promises that are made to you in this MoU (which generally is a form of legal documentation that is in iteself non-binding)would only be enforceable against B and not the company.
If you want to invest, I suggest you marry B’s sister and become his “relative”. This will permit you to invest as much money as you desire(no jokes). Other option is for you to become a shareholder and then invest, even if you hold a nominal single share. You can decide which is easier.
(This is not legal advise and should not be considered such…blah blah)