A business partner stealing money from the company is hard to tackle because the person you suspect usually has the same bank access, board seat and often the same shareholding as you. In England and Wales the law gives you real tools: a director's right to inspect the books, the Companies Act 2006 duties, removal by ordinary resolution, an unfair prejudice petition, a derivative claim, freezing injunctions and a Fraud Act 2006 complaint. The order in which you use them decides the outcome. Since 4 December 2025 fraud is reported to Report Fraud, not Action Fraud, so older guidance is out of date.
Corporate INTL Newsroom · Dispute Resolution & Litigation
Business Partner Stealing Money: UK Steps, Claims and Remedies
By The Corporate INTL Newsroom · 6 November 2026
Business partner stealing money: the short answer
Protect what is left, preserve the evidence, find out exactly what has gone, and only then choose between negotiation, a company claim, a shareholder petition and a police report.
- Day 1 to 3. Ask the bank about dual authorisation and copy the records you can lawfully access.
- Week 1 to 4. Exercise your right as a director to inspect the books, instruct a forensic accountant and take legal advice on duties and remedies.
- Month 1 to 3. Send a letter of claim, call a meeting, and seek urgent court orders if assets are moving.
- Running alongside. Notify insurers, correct the director's loan account and decide whether to report the conduct as a crime.
First steps: secure the money without breaking the law
First stop further payments, through the company's own decision-making rather than unilateral action.
Ask the bank what the mandate says. A board resolution can require two signatories, but on a two-director board you may lack the majority to pass it. Banks often restrict an account when directors are in dispute, which protects the money but can also stop wages and supplier payments.
Self-help carries real risk. Locking a fellow director out, moving company money into your own account "for safekeeping" or reading private email can expose you to claims for breach of duty or data protection breaches, and hands your partner a counter-allegation. Act through the board, keep copies rather than originals, and record what you did and why.
Check, too, whether the person is properly recorded as a director. Companies House identity verification for directors and PSCs means officer records are more reliable than they were, which helps if you later need to prove who held office when payments were made.
Preserving evidence and the right to inspect the books
A director can inspect the company's accounting records at any time; a shareholder who is not a director usually cannot.
Under section 388 of the Companies Act 2006, a company's accounting records must be kept at its registered office or another place the directors choose and "must at all times be open to inspection by the company's officers". Directors also have a common law right to inspect the books, which courts can enforce. Private companies must keep accounting records for three years, public companies for six.
If you are a shareholder but not a director, your position is weaker. Article 50 of the Model Articles for private companies says that, except as provided by law or authorised by the directors or an ordinary resolution, no one may inspect the company's accounting records "merely by virtue of being a shareholder". A shareholders' agreement may give better information rights, so read it first.
Secure bank statements and audit logs, the ledger and director's loan account, expense claims, payroll, supplier bank details (changed details are a classic sign), card statements and board minutes. Export data in native format and log who collected what.
Forensic accounting: what it finds and what it costs
A forensic accountant turns suspicion into a quantified, traceable loss, which is what any lawyer, court or police officer will ask for.
The work covers tracing payments to their destination, testing expenses and supplier invoices, reconciling the director's loan account and finding undeclared related-party transactions. The report then supports a letter of claim, a freezing application, an insurance claim or a criminal complaint.
Fees depend on data volume and how far the money travelled, so ask for a capped first phase, and instruct through your solicitors so litigation privilege is more likely to apply. Our forensic investigations directory lists specialists who handle this kind of review.
Which director duties a partner taking money breaches
A director who takes company money without authority almost always breaches several of the general duties in Part 10 of the Companies Act 2006.
The general duties in sections 171 to 177 require a director to act within powers and in line with the constitution (s171), to promote the success of the company for the members as a whole, including the need to act fairly between members (s172), to exercise independent judgment (s173) and reasonable care, skill and diligence (s174), to avoid conflicts of interest, in particular in exploiting company property, information or opportunities (s175), not to accept benefits from third parties (s176), and to declare an interest in a proposed transaction (s177).
Section 178 makes every duty except the duty of care enforceable like any other fiduciary duty, so the court can order the director to repay what was taken, account for profits or return company property, not just pay damages. Diverting a contract or customer to his own business is caught by s175 even if no cash leaves the account.
The claim belongs to the company, not to you personally, and money taken may later be presented as a "loan", so check what the board ever approved.
Removing a director who is stealing from the company
Shareholders can remove a director by ordinary resolution under section 168 of the Companies Act 2006, whatever any service agreement says.
The process is formal. Special notice of the resolution must be given to the company at least 28 days before the meeting (s312), the company must send a copy to the director at once, and the director is entitled to be heard at the meeting and to have written representations circulated to members (s169). The resolution cannot be passed by written resolution. Removal does not take away any right to compensation under the director's contract.
The obstacle is votes. With more than 50% you can remove your partner; in a 50:50 company you cannot, and weighted voting rights or a shareholders' agreement may also block removal. Removal recovers nothing, but it stops further damage and gives you control of the books and the bank mandate.
Unfair prejudice, derivative claims and winding up
When a business partner is stealing money and you cannot outvote them, the main court routes are an unfair prejudice petition, a derivative claim on behalf of the company, or a petition to wind the company up on just and equitable grounds.
Unfair prejudice petition (s994)
Any member can petition under section 994 on the ground that the company's affairs are being, or have been, conducted in a manner unfairly prejudicial to the interests of members, including the petitioner. Section 996 lets the court make any order it thinks fit, including an order for one member to buy the other's shares, an order regulating the company's future conduct, or authority to bring proceedings in the company's name. Misappropriation by a director-shareholder is a classic ground; the usual outcome is a buy-out at fair value.
Derivative claim (ss260 to 264)
A member can bring a claim in the company's name for breach of duty, breach of trust, negligence or default by a director, including a former director. The member must first ask the court for permission, and the court must dismiss the application if the evidence does not show a prima facie case. Any money recovered goes to the company, not to the claimant.
Just and equitable winding up
Section 122(1)(g) of the Insolvency Act 1986 allows the court to wind up a solvent company where it is just and equitable. It is a last resort, usually for small quasi-partnership companies where trust has collapsed.
In the High Court these cases go to the Insolvency and Companies List, which since 1 October 2026 sits in the new Business and Property Division. A shareholders' agreement may require arbitration instead; our comparison of arbitration and litigation sets out how that changes cost, speed and confidentiality.
Civil fraud claims and freezing injunctions
Where money is being moved or hidden, the company can ask the court for urgent orders before the defendant is told about the claim.
CPR Part 25 allows a freezing injunction restraining a party from dealing with assets in England and Wales or worldwide, together with an order to disclose where those assets are. It also provides for search orders and, under the reformed rules, imaging orders that let an independent IT expert copy devices and online accounts. Applications need affidavit evidence and the model order wording, and may be made without notice where secrecy is essential. The applicant gives undertakings to the court, including to cover the respondent's losses if the order proves wrong. Global Law Experts' checklist on freezing injunctions in England and Wales sets out the four things the court looks for: a good arguable case for a money judgment, assets to freeze, a real risk of dissipation and that relief is just and convenient, together with the duty of full and frank disclosure on a without-notice application.
The company may also claim against anyone who knowingly received the money and trace into assets bought with it. Court fees are modest beside lawyers' costs: on the HMCTS EX50 fee list updated on 26 October 2026, a general application without notice costs £126 and one on notice £321, while a money claim above £200,000 carries a £10,000 issue fee.
Limitation is usually six years, but section 21 of the Limitation Act 1980 sets no time limit for claims against a trustee for fraud or to recover trust property, and directors who misapply company money can be treated in the same way. If the defendant's assets are abroad, see our guide on enforcing a judgment in another country; if costs are a barrier, litigation funding may help with a strong claim against a solvent defendant.
Reporting to the police: Report Fraud and the Fraud Act 2006
Taking company money dishonestly can be a crime as well as a civil wrong, and the main offence is fraud by abuse of position.
Section 4 of the Fraud Act 2006 applies to anyone in a position where they are expected to safeguard, or not act against, the financial interests of another, who dishonestly abuses that position intending to make a gain or cause a loss. A director is the obvious example. Under section 1 the maximum sentence on indictment is 10 years' imprisonment. Theft and false accounting may also apply.
Reports now go to Report Fraud. According to the Serious Fraud Office notice of 4 December 2025, the City of London Police service replaced Action Fraud as the national reporting platform for fraud and cyber crime, at reportfraud.police.uk or on 0300 123 2040, the same number as before.
A criminal investigation can be slow and does not itself put money back, so many owners run the civil claim first or in parallel. Never threaten a police report to extract payment.
Does the failure to prevent fraud offence apply?
Usually not, because the offence targets fraud intended to benefit the organisation, not fraud against it.
The offence in section 199 of the Economic Crime and Corporate Transparency Act 2023 came into effect on 1 September 2025. Home Office guidance on the offence confirms that it applies only to large organisations meeting two of three tests: more than 250 employees, more than £36 million turnover, more than £18 million in total assets. A partner siphoning money for himself makes the company a victim, but fraud on customers or lenders to win business for the company is different; read our analysis of the offence coming into force and our guide to reasonable fraud prevention procedures.
Partnerships and LLPs: the account remedy
In a traditional partnership, a partner who takes firm money must account for it, and the remedy is an order for an account.
Under the Partnership Act 1890, every partner may inspect and copy the partnership books (s24(9)), must render true accounts and full information (s28), must account for any private benefit from partnership transactions or property (s29), and must pay over profits from a competing business (s30). The court can dissolve the partnership under s35 where a partner wilfully or persistently breaches the agreement or makes it impractical to carry on together. The partnership agreement often adds expulsion and arbitration clauses that matter more than the Act.
Limited liability partnerships are different: members' duties come largely from the LLP agreement, but the unfair prejudice provisions in ss994 to 996 apply to LLPs, with modifications, under the 2009 LLP regulations.
Insurance: crime cover and D&O
Check every policy the company holds as soon as you suspect theft, because late notification can lose cover.
- Commercial crime or fidelity cover. Pays for loss caused by employee dishonesty, but many policies limit cover for directors or significant shareholders.
- Directors' and officers' (D&O) cover. Responds to claims against directors, and may fund your own defence if your partner counter-claims. Exclusions for proven fraud or dishonesty are common.
- Notification. Most crime and D&O policies are written on a claims made basis; our guide to claims made and occurrence policies explains why prompt notice matters.
Tax and accounts consequences
Money taken by a director-shareholder usually sits in the director's loan account, and that triggers tax for the company even before anything is recovered.
HMRC's director's loan guidance says that if a loan is not repaid within nine months of the end of the Corporation Tax accounting period, the company pays Corporation Tax at 33.75% of the outstanding amount, reclaimable when the loan is repaid. A loan above £10,000 is a benefit in kind, and a written-off loan attracts Class 1 National Insurance and income tax. Past accounts may need restating; our guide to filing accounts with Companies House covers deadlines and penalties. If the losses leave the company unable to pay its debts, see what happens when a company goes into administration.
Remedies compared: what each achieves, cost and time
The right remedy depends on your shareholding, whether the money can still be traced, and whether you want to keep the business, sell out or close it.
| Remedy | What it achieves | Cost | Typical time |
|---|---|---|---|
| Board action and bank mandate change | Stops further payments | Low | Days |
| Removal under s168 | Removes the director; no recovery | Low, but needs a majority | About 4 to 6 weeks (28 days' special notice) |
| Freezing, search or imaging order | Preserves assets and evidence | High, with undertakings | Days |
| Company claim for breach of duty or fraud | Repayment, account of profits, tracing | Medium to high | Months to two years or more |
| Derivative claim | Company claim when the board will not sue | High; permission stage first | Months to years |
| Unfair prejudice petition (s994) | Usually a share buy-out at fair value | £352 court fee; high legal costs if contested | Often one to two years |
| Just and equitable winding up | Ends the company; liquidator investigates | £352 fee plus deposit | Months |
| Report Fraud complaint | Possible prosecution and compensation | Free | Uncertain, often long |
| Partnership account (s28) | Accounting between partners, dissolution | Medium to high | Months to years |
Fees are EX50 court fees. A negotiated buy-out often ends the dispute faster than a trial; our guide to share sales and asset sales covers the structures.
Other jurisdictions in brief
Section 994 applies across the UK; Scotland has its own courts. Many common law offshore centres have similar unfair prejudice remedies, while US states rely on fiduciary duty claims under state law. If the company or the money is abroad, take local advice early.
When to get professional help
Get advice as soon as the suspicion is credible and before any confrontation. A business partner stealing money is a company law, fraud and tax problem at once, so you may need a litigator, a forensic accountant and a tax adviser together. Our directory lists dispute resolution lawyers, criminal and white-collar specialists and advisers across England.
Frequently asked questions
What happens if someone steals money from a company?
The company can sue to recover it, claim profits made from it and trace assets bought with it. A director who takes it breaches Companies Act 2006 duties, and dishonest taking can also be fraud or theft.
Can my business partner withdraw funds without my consent?
Only if the bank mandate and the board's authority allow it, and only for proper company purposes. Taking money for himself without approval breaches his duties even if the bank processes the payment.
What is misuse of company funds?
Using company money for something other than its business, such as personal spending, payments to connected businesses or fake expenses. It usually breaches the duties in sections 171 to 177 of the Companies Act 2006.
Can a business partner be charged with embezzlement?
England and Wales has no offence called embezzlement. The usual charge is fraud by abuse of position under section 4 of the Fraud Act 2006, with a maximum of 10 years' imprisonment, or theft. Reports go to Report Fraud.
Can a 50% shareholder bring an unfair prejudice petition?
Yes. Any member can petition under section 994, including a 50:50 shareholder in deadlock. Because a 50% holder cannot remove the other director by vote, a petition seeking a buy-out is often the realistic route.
Can I look at the company's books if I suspect theft?
If you are a director, yes: section 388 of the Companies Act 2006 keeps accounting records open to inspection by officers at all times. A shareholder who is not a director usually has no such right under the Model Articles unless the shareholders' agreement grants one.
How much does it cost to remove a director?
There is no court fee: section 168 needs an ordinary resolution at a general meeting after 28 days' special notice. Costs are mainly legal fees and any contractual compensation; the real hurdle is votes.
Should I report my business partner to the police first?
Not necessarily. Secure the money and evidence and consider urgent civil orders first. A criminal case can be slow and does not itself recover money, but serious, provable fraud should be reported to Report Fraud.
How do you legally end a business partnership?
Follow the partnership agreement or ask the court to dissolve it under section 35 of the Partnership Act 1890. For a company, the routes are a negotiated share sale, an unfair prejudice petition leading to a buy-out, or a just and equitable winding up.
Sources
- Companies Act 2006, Part 10, Chapter 2 (general duties of directors, sections 170 to 181): legislation.gov.uk
- Companies Act 2006, section 388 (accounting records open to inspection): legislation.gov.uk
- Companies Act 2006, section 994 (unfair prejudice petition): legislation.gov.uk
- Civil Procedure Rules, Part 25 (interim remedies, freezing injunctions, search and imaging orders): justice.gov.uk
- HMCTS, Civil court fees (EX50), updated 26 October 2026: gov.uk
- Fraud Act 2006, section 4 (fraud by abuse of position): legislation.gov.uk
- Serious Fraud Office, Report Fraud: New service from City of London Police (4 December 2025): gov.uk
- Home Office, Guidance to organisations on the offence of failure to prevent fraud: gov.uk
- Partnership Act 1890, section 28 (duty to render accounts): legislation.gov.uk
- HMRC, Director's loans: if you owe your company money: gov.uk
- Global Law Experts, Freezing Injunctions in England & Wales: A Checklist for Overseas Litigators: globallawexperts.com
About this article
Researched and written by The Corporate INTL Newsroom and checked against the Companies Act 2006, the Fraud Act 2006, the Partnership Act 1890, the Civil Procedure Rules, HMCTS fee tables and Home Office, HMRC and Serious Fraud Office guidance. It focuses on England and Wales; Scotland and Northern Ireland have their own courts and procedures. This article is general information, not legal advice; for a specific dispute, consult a qualified adviser. Last reviewed 6 November 2026. For more analysis like this, visit the Corporate INTL newsroom or subscribe to our newsletter.
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