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Does the accountant HAVE to talk to me?

Discussion in 'Business Legal Issues' started by Propagate, 18th Jan, 2017.

  1. Propagate

    Propagate Member

    Joined:
    30th Aug, 2016
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    VIC
    Long story behind this, but the crux of it is I bought a business last year.

    There are a few things come to light last week from the companies past that means there is a substantial liability on the companies books that I was not made aware of when we made the deal.

    I'm covered in that the seller warranted in the sale contract that any issues arising from anything from prior sale date would fall back on him, and he has again stated such in an e-mail to me yesterday.

    However, the issue is that he is a bit of an idiot. He thinks he knows "everything", and as such, neglects to tell his accountant and solicitor things that he feels aren't important, but which generally are very important, which is why the current mess has arose.

    I have been communicating with him via e-mail so we have a paper trail, and I have been copying in his and my accountant in to ensure he is getting the full??? story.

    The vendor has now expressly asked me not to contact or copy in "his" accountant.

    Now, what I'd like to know is this, the account is strictly NOT speaking HIS accountant, it's the companies accountant, of which he is no longer a director or shareholder.

    So, the sale settled on 26th May 2016 and it came to light that no returns had been lodged for 2014 or 2015 financial years.

    The vendor set about instructing his accountant to lodge them and was expressly told by me NOT to lodge 2016 as that was now my responsibility.

    Needless to say, he has only just now got them lodged and has gone ahead and lodged 2016 too.

    So, the accountant that lodged the returns for the company for 2014, 2015 & 2016 was instructed to do so by the vendor on behalf of the company, but for 2016 he was no longer the director and had no authority to do so.

    Now that I am the director, can the accountant refuse to talk to me about the three returns? I want to sit down with him and go through where he got the information from to lodge the three returns but I don't think he wants to talk to me. As the director of the company though, does he have a legal obligation to? Or, is he still confidentially bound to the "person" that engaged him for the company?

    I don't want to get anyone off side just yet by explaining to the accountant that he should not have submitted the 2016 returns as he did so under NO authority of the company! But I will use that if I have to.

    Cheers.
     
  2. Propagate

    Propagate Member

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    All good, he has decided to talk to me, we have the start of some progress.

    Would be interested to know the legalities of whether he has to or not still though.
     
    Simon Hampel likes this.
  3. Terry_w

    Terry_w Active Member

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    Sounds like you purchased shares in the company. The previous owner of the shares is no longer owner and is no longer director so he has no authority to talk to the accountant at all about the company or its financials. This is the case even for the prior year financials of the company.
     
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  4. Propagate

    Propagate Member

    Joined:
    30th Aug, 2016
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    Thanks @Terry_w that's what I thought. Yes, I bought out 100% of the shares. Trouble is, the ex owner "thinks" HE is the company.... he's a very hard guy to deal with, not so much in that he won't talk to me more that he just thinks he knows eveything, it's so frustrating.

    The good news is his acountant is now talking to me and my acountant, and I think I have enough info to get it all properly sorted now without having to deal with the ex owner much more.
     
  5. Terry_w

    Terry_w Active Member

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    Prob best to try to keep the old owner onside as much as you can so that he can pay any liability of the company without too much resistance.
     
  6. Paul@PFI

    Paul@PFI Member

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    Sydney
    The Director at that time is the authority to lodge . NOT the Director today. A company does not authorise a thing a Director does. If you acquired the company you must re-engage him and he cannot divulge a thing to the former owner. Its complex and crosses ethical issues. As a consequence he may sack his client. So he may refuse your work. He is allowed to.

    This is basic Corporations Law. He can decline to speak to you but ethically may have to explain his position as you are his new client provided he agrees to retain the engagement. He could sack you.

    Better if you meet and ask his position and seek his support to work on your terms