Can I Sue My Business Partner for Taking Money From the Company?

Discovering that a business partner or fellow director has taken money from the company without authorisation is both personally and financially serious. The law provides several routes to address this, and acting quickly is important to protect the company's position.

What Legal Claims Might Arise?

A business partner who takes money from the company without authorisation may be liable for breach of fiduciary duty, since company directors owe duties to act in the best interests of the company and to avoid conflicts of interest. They may also be liable for breach of contract if a shareholders' agreement or partnership agreement has been breached, for unjust enrichment where they have been enriched at the company's expense without justification, and in some cases for fraud.

What Evidence Do You Need?

Bank statements and financial records showing the transactions are the starting point. Board minutes and shareholder resolutions will show what payments were authorised. Any employment contract, service agreement, or shareholders' agreement will show what the partner was entitled to draw. Emails or messages that shed light on the partner's state of mind may also be relevant, particularly if fraud is alleged.

Can You Bring a Claim on Behalf of the Company?

Where the money taken belongs to the company rather than to you personally, the cause of action lies with the company, not with you as an individual shareholder. In these circumstances, a derivative claim may be available: a procedure that allows a shareholder to bring proceedings on the company's behalf where those who control the company are themselves the wrongdoers and therefore will not authorise the litigation themselves.

What About Immediate Steps?

Where significant sums are involved, it may be important to act quickly to prevent further dissipation of assets. An application for an injunction or a freezing order can be made urgently to prevent the partner from further dealing with company funds or assets. These applications can be made without notice to the other party in urgent cases.

Summary

If a business partner has taken money without authorisation, potential claims include breach of fiduciary duty, breach of contract, and unjust enrichment. Where the claim belongs to the company, a derivative claim may be needed. Urgent injunctions are available to prevent further dissipation. A specialist commercial barrister can advise on the available routes and the most effective course of action.

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